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

[Jan Werner]

One needs to be careful about assuming that Wordpress development will 
not be taxable.

The DOR clarifications define "Open Source" only as software that is 
available for free on the Internet and "Inconsequential" as less than 
10%  of the total.

The use of paid themes or plug-ins that exceed 10% of the total cost of 
a job could make the whole job taxable.

Jan Werner
___________


Bruce Hooke wrote:
>     ** Be sure to fill out the survey/skills inventory in the member's area.
>     ** If you did, we all thank you.
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>
>
> 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 question.
> 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:
> http://www.mass.gov/dor/businesses/help-and-resources/legal-library/tirs/tirs-by-years/2013-releases/tir-13-10.html
> 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 unnecessarily.
> Thanks,
> Bruce
>
> ------------------------------------------------------------------------
> *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.
>
> Stan
>
> Sent from my iPhone
>
>
> Begin forwarded message:
>
>     *From:* "Merigan, Maryann (DOR)" <meriganm at dor.state.ma.us
>     <mailto:meriganm at dor.state.ma.us>>
>     *Date:* August 23, 2013, 11:09:38 AM EDT
>     *To:* HOU-DL - HOUSE REPS <HOU-HOUSEREPS at mahouse.gov
>     <mailto:HOU-HOUSEREPS at mahouse.gov>>, HOU-DL - HOUSE STAFF
>     <HOU-HOUSESTAFF at mahouse.gov <mailto:HOU-HOUSESTAFF at mahouse.gov>>,
>     HOU-DL - HOUSE AIDES <HouseAides at mahouse.gov
>     <mailto:HouseAides at mahouse.gov>>, SEN-DL-ALLSTAFF
>     <SEN-ALLSTAFF at masenate.gov <mailto:SEN-ALLSTAFF at masenate.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
>     <http://www.mass.gov/dor/businesses/help-and-resources/legal-library/tirs/tirs-by-years/2013-releases/working-draft-tir-computer-software.html>
>     will help clarify what services are, or are not, subject to
>     tax.  The TIR is released as a public working draft and comments are
>     solicited.
>
>     *Information Resources from DOR:*
>
>     1.The DOR website
>     <http://www.mass.gov/dor/utility/recent-tax-changes.html> offers a
>     special section dedicated to information on the recent tax changes
>     at www.mass.gov/dor/newtaxinfo <http://www.mass.gov/dor/newtaxinfo>
>     including a letter and video from the Commissioner.
>
>     2.The new Technical Information Release
>     <http://www.mass.gov/dor/businesses/help-and-resources/legal-library/tirs/tirs-by-years/2013-releases/working-draft-tir-computer-software.html>providesfurther
>     guidance on what is, and what is not, taxable.
>
>     3.A detailed set of FAQs
>     <http://www.mass.gov/dor/docs/dor/law-changes/faqss-computer-software-2013.pdf>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
>     <mailto: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 <mailto: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
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>     the system manager at postmaster at dor.state.ma.us
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