[Hidden-tech] FW: Additional guidance from the Department ofRevenue on Computer Software Tax

Bruce Hooke bghooke at att.net
Fri Aug 23 17:54:07 EDT 2013

Thanks Reva,
The "Technical Information Release" is very useful. It looks to me like it
makes it clear that:
A. The DOR considers macros, spreadsheets, and presumably also databases
that run on paid-for database platforms such as Access, SQL Server, etc. to
be taxable. Some may question the "why" of this, but at least we have a
clear answer. To me a clear distinction here is does the customer have to
buy some software package to use what you are developing for them. I may use
various paid-for development tools to help me create software, but if the
customer does not need to own certain paid-for software (beyond an operating
system) to use my software then what I am doing is not a modification to
pre-written software. What this means if you distribute a free "run-time"
version of Access to allow your software to work may still be an open
B. Websites and other software custom built to run using open-source
platforms or environments are not taxable. So, even though a Wordpress
website is clearly a "modification" of Wordpress, since Wordpress is open
source there is no sales tax (assuming something else does not create a
sales tax liability). Ditto for many other open source website plug-ins.
This is very good news for a lot of website developers.
C. Integration of minor paid for "pre-written software" such as a small
website plug-in that was paid for, does not make the website work taxable.
It is important to remember that tax is owed on the plug-in. Since most such
plug-ins will be purchased from out of state, "use tax" will likely apply.
This last point also brings up another matter. Some people have been worried
about the tax creating a competitive disadvantage. It seems to me that it is
fairly hard to construct a scenario where a customer would owe the
Massachusetts sales tax if they hire a Massachusetts company to do the work,
but would not owe the tax if they engaged a company that is out of state. If
you have a customer that says "I can hire somebody from out of state and I
won't have to pay the sales tax" you may want to gently point out to them
that in this case they would owe Use Tax and while many people duck Use Tax,
the DOR watches this issue much more closely with businesses than it does
with private citizens so a business ducking this tax is taking a significant
risk of getting hit for back taxes and penalties. If your customer is out of
state then you just need to make sure that the software is not "delivered"
in Massachusetts, so that the customer does not have to pay Massachusetts
sales tax. The July 25 technical guidance, which I think is still valid
since the new technical guidance does not modify this section, covers this
in detail in section C:
Of course it is still a valid complaint that the tax may cause some
customers to shelve projects. That is always an issue with sales tax. 
If anyone thinks I am misunderstanding any of the above, please speak up. If
nothing else, it is important for us to understand this law so we don't end
up owing sales tax that we did not collect, or collecting sales tax


From: hidden-discuss-bounces at lists.hidden-tech.net
[mailto:hidden-discuss-bounces at lists.hidden-tech.net] On Behalf Of Reva Reck
Sent: Friday, August 23, 2013 11:41 AM
To: 'hidden-discuss'
Subject: [Hidden-tech] FW: Additional guidance from the Department ofRevenue
on Computer Software Tax

I just got this email from Stan Rosenberg. 



Reva Reck

Reva at RevaReck.com


From: Rosenberg, Stan C (SEN) [mailto:Stan.Rosenberg at masenate.gov] 
Sent: Friday, August 23, 2013 11:24 AM
To: Reva Reck
Subject: Fwd: Additional guidance from the Department of Revenue on Computer
Software Tax


This just in. 


Sent from my iPhone

Begin forwarded message:

From: "Merigan, Maryann (DOR)" <meriganm at dor.state.ma.us>
Date: August 23, 2013, 11:09:38 AM EDT
<HOU-HOUSESTAFF at mahouse.gov>, HOU-DL - HOUSE AIDES <HouseAides at mahouse.gov>,
Subject: Additional guidance from the Department of Revenue on Computer
Software Tax

The Department of Revenue is appreciative of the thoughtful and insightful
feedback from the computer services industry over the last few weeks.  In
addition to input from two focus groups, DOR received numerous questions,
business scenarios and comments from taxpayers and practitioners on the
application of the sales and use tax to certain computer services.  The
feedback was an enormous help in developing further guidance.  


A new Technical
Information Release will help clarify what services are, or are not, subject
to tax.  The TIR is released as a public working draft and comments are


Information Resources from DOR:

1.                   The
<http://www.mass.gov/dor/utility/recent-tax-changes.html> DOR website offers
a special section dedicated to information on the recent tax changes at
www.mass.gov/dor/newtaxinfo including a letter and video from the


2.                   The new Technical
Information Release provides further guidance on what is, and what is not,


3.                   A detailed set of FAQs
df>  provides both general and detailed guidance.  


4.                   Comments on the working draft of the new TIR, and any
other comments or suggestions on the computer software tax, should be
submitted to rulesandregs at dor.state.ma.  


5.                   Customer service can be reached at 617-887-6367 or in
MA only at 800-392-6089.



Description: Description: Description: 360 LOGO 

Maryann Merigan

DOR360 Director

dor360 at dor.state.ma.us





This email and any files transmitted with it are confidential and 

intended solely for the use of the individual or entity to whom they 

are addressed. If you have received this email in error please notify 

the system manager at postmaster at dor.state.ma.us. 



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