Navigating Divergent State Sales Tax Treatment of Product and Service Warranties and Software Maintenance Contracts

Recording of a 110-minute CPE webinar with Q&A

Conducted on Tuesday, February 21, 2017
Recorded event now available

This webinar will provide tax professionals with a detailed update on the latest state tax developments and trends for multi-state companies buying or selling warranties. The panelist will offer compliance approaches to adjust to multi-state developments.


Whether a company acts as buyer or seller, sales of warranties or maintenance contracts covering various products (along with associated labor and parts) are an area of state sales tax policy with considerable variation and confusion for multi-state corporations.

In many states, a service agreement that must be bought with a product is taxed, while an optional warranty is exempt. However, optional software maintenance agreements often are handled differently. Sales tax on parts and labor may depend on whether the warranty is mandatory or optional and who backs it.

Depending on the state, buyers and sellers may need to consider whether the “true object” of a warranty contract sale was a product or service; whether the deductible for warranted repairs is taxable; and whether withdrawal of repair parts from inventory constitutes a taxable sale.

Listen as our experienced state tax adviser provides a practical guide to the latest developments in state sales tax treatment of warranties to effectively manage this complex aspect of multi-state sales tax compliance.


  1. General state tax issues with warranties
    1. Treatment of mandatory vs. optional warranties
    2. Handling of contracts covering physical products vs. software
    3. Special issues with extended warranties
    4. Taxability or exemption parts and labor
  2. More complex issues with warranties
    1. States that impose “true object” tests
    2. When and where using third-party warranty administrator can trigger sales tax nexus
    3. Handling of inventory withdrawals of repair parts
    4. Taxability of deductibles
  3. Specific large state examples
  4. Options for adjusting a multi-state tax compliance strategy


The panelist will bring you current on these and other critical areas:

  • Variations among states’ sales tax policies covering mandatory vs. optional or extended warranties
  • Software maintenance agreements: which states opt to treat service contracts differently when they cover software vs. a tangible product
  • Potential nexus traps: when using a third-party warranty administrator can create sales tax duties for your company in a state
  • Current hot topics: impact of state court and administrative rulings; issues such as extended warranties purchased online

Learning Objectives

After completing this course, you will be able to:

  • Recognize recent state sales tax developments and changes to sales and use tax treatment of tangible products related to warranties
  • Identify states that impose sales and/or use tax on software maintenance agreements
  • Determine how states include associated parts and labor on warranty work as subject to sales tax
  • Discern whether your company’s sales tax policies on warranty sales or purchases are in compliance with current multi-state developments


Sean Evans, Director, Tax Advisory Services
DuCharme McMillen & Associates, Overland Park, Kan.

Mr. Evans provides a variety of nationwide tax advisory services including sales/use tax process reviews, nexus studies, sales/use tax training, and voluntary disclosure negotiations. Additionally, he is skilled in developing tax matrices designed to support clients’ business process requirements as well as strategic tax planning. He also serves as project manager for tax software implementations and business process reviews. He has 20 years of experience in transaction tax consulting. Prior to joining DMA, he was a Senior Tax Manager for a national tax firm, where he conducted both public and on-site training courses on sales/use tax as well as federal information reporting.


Recorded Event

Includes full event recording plus handouts.

Note: Self-study CPE and EA credits are not offered on recorded events.

Recorded Webinar Download $247.00

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Recorded Audio Download (MP3) $247.00

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Program Materials

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Program Materials

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Customer Reviews

It was an excellent program!!

Marni Odermann


Provided a lot of information. Examples made it easier to put in everyday perspective.

Therese Au

Forsythe Technology

I liked that the PowerPoint slides would automatically change as the speaker's presentation progressed.

Zeeshan Elahi


I liked the clear and concise manner in which the topics were presented.

Angelina Johnson-Brown

General Electric Company

I found the presenters to be very experienced and the Q&A's to be particularly useful.

Mike O'Brien

American Eagle Outfitters

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Sales and Use Tax Advisory Board

Silvia Aguirre

Chief Certificate Officer


Rick Bregitzer

Manager of Domestic Taxes


Stephanie Anne Lipinski-Galland


Williams Mullen

Joseph Geiger, Esq., CPA

Tax Consultant


Diane Matulich

Senior Manager, Local Taxes

Advanced Micro Devices

Rich Prem

VP of Indirect Taxes and Tax Reporting

or call 1-800-926-7926

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