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

Scott Reed sreed at avacoda.com
Fri Aug 23 21:40:31 EDT 2013


Thanks for the clarification. Have they updated the FAQ or is that 
covered in another section?

On 8/23/2013 8:10 PM, Lynn Nichols wrote:
> I do not agree that a website designer's services in building a Joomla 
> or Drupal website would be taxable under the new law, at least 
> according to the new clarification. They are both open source, as is 
> WordPress. Excel and Access are NOT open source.
>
> -- 
> Lynn Nichols
> Starstruck Design
> Gill, MA / 413.863.7752
> lynn at starstruckdesign.com <mailto:lynn at starstruckdesign.com>
> http://www.starstruckdesign.com
> http://www.shopwesternmass.com
>
> On Aug 23, 2013, at 7:04 PM, Scott Reed <sreed at avacoda.com 
> <mailto:sreed at avacoda.com>> wrote:
>
>>   ** Be sure to fill out the survey/skills inventory in the member's 
>> area.
>>   ** If you did, we all thank you.
>>
>>
>> The following is lifted from the DOR's FAQ:
>>
>>     2.  What are modifications to prewritten software that are
>>     taxable under the new law?
>>
>>     A.  Modifications to prewritten software that are subject to tax
>>     under the new law are modifications to  software which is
>>     licensed, sold or otherwise made available to more than one user,
>>     where such prewritten software is modified for the use of a
>>     specific customer.  The modification may be made either by the
>>     original seller/licensor of the software or by a third party.
>>
>>     For purposes of this tax on modification, integration,
>>     enhancement, installation or configuration of standardized
>>     (prewritten) software, prewritten software *does not include*
>>     proprietary code owned by the provider (seller) of the
>>     modifications if that proprietary code is not separately licensed
>>     to customers.
>>
>>     Custom application software (including custom software that
>>     incorporates such proprietary code) that is designed to run on a
>>     prewritten operating system is /treated as custom software and
>>     not as a modification of the prewritten operating system software/.
>>
>> I interpret the second sentence to say that there is no tax on 
>> original code as long as the modifications are not licensed to the 
>> customer (i.e. as long as the customer is paying for the coder's time 
>> and not for a license to use the coder's product).
>>
>> I interpret the third sentence to say that there is no tax on 
>> original (unlicensed) code that uses prewritten, third party, 
>> libraries and runs on prewritten OSs.
>>
>> This lets those that write code off the hook for the most part and it 
>> helps clarify that the tax *does apply* to development within 
>> standalone database frameworks like Excel, Access, Drupal, Joomla, 
>> etc. where much of the development involves modification to an 
>> underlying database.
>>
>> I wonder, however, if they tax bookkeeping services and, if not, how 
>> is that different from working within these other database frameworks?
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