Software Tax Law News: Are Tesla Owners Being Unfairly Taxed?

California Tax Law News: Elon Musk Questions Cali Tech Tax

Picture of a Tesla to accompany article about Elon Musk questioning California's software tax
Credit: Wikipedia User: Mariordo

Elon Musk is back in the headlines. This time around, the tech entrepreneur has weighed in about California tax law and whether or not it’s right for Tesla to charge a sales tax on the software that controls the semi-autonomous driving mechanism.

Asana Engineer Questions Musk About Autopilot Tax

At the end of March, Alex Ryan, who works for Asana, shouted-out Musk on Twitter, chastising:

“Apple and Google don’t charge us sales tax when we buy apps for our phones. Tesla shouldn’t treat us differently when we buy software for our cars!”

Ryan also linked to California’s sales and use tax law, Regulation 1502, which states:

The sale or lease of a prewritten program is not a taxable transaction if the program is transferred by remote telecommunications from the seller’s place of business, to or through the purchaser’s computer and the purchaser does not obtain possession of any tangible personal property, such as storage media, in the transaction. Likewise, the sale of a prewritten program is not a taxable transaction if the program is installed by the seller on the customer’s computer except when the seller transfers title to or possession of storage media or the installation of the program is a part of the sale of the computer.

In response, Musk tweeted:

“Tax authorities tend to interpret things in their favor, but it sure sounds like you could be right! Will investigate.”

But, like Nick Rishwain, a fellow legal tech analyst, we think Ryan may have “missed the tangible personal property reference” in the law.

Note, however, that clarification on the issue may come soon, as several tech outfits are asking for guidance about certain levies.

Get Advice from a Tax Law Attorney

We’ll have to wait to see how this Tesla tech tax issue resolves. In the meantime, if you’re a tech business in need of tax law advice, get in touch with us, the Gordon Law Group, today. Our team handles everything from tax positioning to ICO consultations.

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