Nortel Networks Inc. v. Board of Equalization

Opinion

BOREN, P. J.

This appeal requires an interpretation of the Sales and Use Tax Law. (Rev. & Tax. Code, § 6001 et seq.)1 Nortel Networks Inc. sells telephone switching equipment in California. Income from switch hardware sales is indisputably taxable by the State of California. The question is whether sales tax is imposed on the software that Nortel licenses to operate the switching equipment. The Board of Equalization (the Board) determined that Nortel owed sales tax on software it licensed between January 1994 and December 1997. Nortel paid the tax then sued for a refund.

We conclude that…