Thursday, April 16, 2009

Computer Software is not Tangible Property

The Fourth DCA joined the anti-tax protests on April 15, 2009 and affirmed the circuit court's decision that Palm Beach County could not tax computer software owned by Verizon Wireless. The court in Nikolits v. Verizon Wireless Personal Communications, L.P. (4D08-1389) held:

A close examination of the definition of tangible personal property contained in section 192.001 compels the same result. In particular, that definition states that tangible personal property is “all goods, chattels, and other articles of value . . . capable of manual possession and whose chief value is intrinsic to the article itself.” § 192.001(11)(d). Although computer software’s value is intrinsic in and of itself, as the “essence of the property is the software itself, and not the tangible medium on which the software might be stored,” Gilreath, 751 So. 2d at 708, it is property incapable of manual possession. This is because, software, itself, is “not capable of being ‘seen, weighed, measured, felt or otherwise perceived by the senses.’” Id. (quoting Dallas Cent. Appraisal Dist. v. Tech Data Corp., 930 S.W.2d 119, 122 (Tex. App. 1996)). Rather, the tangible medium on which it is transported and transmitted is the means by which the property is manually possessed.

Therefore, we agree with the Fifth District’s decision in Gilreath and hold that “computer software” is intangible personal property. As such, we affirm the trial court’s decision that the Wireless Services Software is not taxable by Palm Beach County, as it is intangible personal property, which is property outside a county’s taxing authority.


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