Sales/Use/Indirect:
Washington DOR Posts Multiple Points of Use Exemption Guidance on Mixed Element Software Maintenance Agreements

Interpretative Statement: Excise Tax Advisory No. 3242.2025, Wash. Dept. of Rev. (3/27/25); Excise Tax Advisory No. 3242.2025, Wash. Dept. of Rev. (3/27/25). The Washington Department of Revenue posted an excise tax advisory (ETA) that seeks to provide guidance on the application of Washington’s multiple points of use (MPU) sales tax exemption to sales of software maintenance agreements with mixed elements (“MESMAs”), specifically involving sales of distinct and identifiable products for one nonitemized price (i.e., a bundled transaction). The guidance explains that a MESMA that qualifies as a bundled transaction and is otherwise subject to Washington retail sales tax is eligible for the MPU exemption if it meets the following criteria:

1. The MESMA includes one or more MPU-eligible products (e.g., prewritten computer software or prewritten software upgrades), and each MPU-eligible product is concurrently available for use inside and outside of Washington;
2. The non-retail taxable products provided under the MESMA relate to the MPU-eligible product(s) of the MESMA (e.g., customer help desk support for the prewritten computer software); and
3. The MESMA does not contain any retail-taxable product other than the MPU eligible product(s) that are concurrently available for use inside and outside of Washington.

The guidance also explains that the non-retail taxable products in a MESMA are considered to “relate” to an MPU-eligible product only if the non-retail-taxable products provide support, maintenance, or improvements to the MPU-eligible product(s). Illustrative examples are included in the ETA, as well as underlying documentation requirements. Please contact us with any questions.