[Hidden-tech] IT tax coming -- did you know ?

Rich Roth webmaster at hidden-tech.net
Thu Jul 25 15:30:36 EDT 2013


Here is what happens when we don't watch or have someone watching our business sector at a 
legislative level.

The latest transportation bill that just became law over Gov Patrick's veto extends 6 1/2 
% tax to all IT and related industry.
This new tax applies to anyone who sells any IT/computer related services and that very 
likely includes web developers of all sorts.

Here is the final law: https://malegislature.gov/Bills/188/House/H3535
The sections in question are 48+49 - they removed the prior exclusion on taxabiltiy of IT 
and software services.

Here is the General Law as it currently exists: 
https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter64H
But since it is by section and not line # like the changes, will someone please figure out 
what the new law says ?

The net-net is many of you will have to starting filing Mass sales tax papers, even if 
your business comes from out of state,
which I expect will not be taxable.

This is an analysis from Mass Taxpayers foundation:
"The tax is so broad that it will affect virtually all industries"

http://masstaxpayers.org/sites/masstaxpayers.org/files/MTF%20Statement%20on%20Computer%20and%20Software%20Services%20Tax_6-26-2013%20.pdf

http://masstaxpayers.org/sites/masstaxpayers.org/files/MTF%20comment%20on%20computer%20sales%20tax%20March%202013%20(2).pdf 
<http://masstaxpayers.org/sites/masstaxpayers.org/files/MTF%20comment%20on%20computer%20sales%20tax%20March%202013%20%282%29.pdf>

The worst part of the situation is that none of the groups who are charged with watching 
the legislative arena for tech related issues did their job to bring this to our attention 
soon enough to do anything about it.

Below are some references that I found on the new situation and is the story that Richie 
Davis from the Greenfield Recorder about it (and yes, he got my company name wrong, it is 
TNR Global), -- all too late to change it.
Thanks to Richie for giving me some heads up this was happening, at least before choking 
on my morning tea.

References:

http://jamaicaplain.patch.com/groups/politics-and-elections/p/legislators-override-gov-patricks-transportation-bill-veto 


http://www.informationweek.com/government/state-local/massachusetts-computer-services-tax-rile/240158584 


http://www.latestcurrentnews.com/software-design-tax-plan-for-mass-draws-fire-boston-globe/

http://www.telegram.com/article/20130708/NEWS/107089987/1020

http://www.masslive.com/opinion/index.ssf/2013/07/editorial_tech_tax_proposal_wo.html

http://www.bostonglobe.com/business/2013/07/05/taxpayer-group-moves-rein-software-tax/cqHzSqU0fpVWIAHimXtdJK/story.html 


http://www.bostonglobe.com/business/2013/07/17/tech-sector-powerless-stop-new-software-tax/eEJi5ankQ3zNz2AGr9qeTK/story.html 


   --
Rich Roth
Webmaster/Steering Committee Member
Hidden-tech http://www.hidden-tech.net
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 From Greenfield Recorder: July 25, 2013

*
Local experts weigh in on computer tax*

*
By RICHIE DAVIS Recorder Staff*

Overshadowed by a proposed hike in the gasoline tax and other elements in the 
transportation bill standoff between Gov. Deval Patrick and the Legislature is a new tax 
on computer and data processing services that business groups say could burden virtually 
every business in the state and make Massachusetts a much less attractive place to do 
business.

Most businesses contacted in Franklin County Wednesday said they were not aware of the 
Legislature's proposal --- enacted as part of its veto override Wednesday --- to extend 
the 6.25 percent sales tax to the technological services, despite a memo forwarded to 
Franklin County Chamber of Commerce board members Tuesday by Chamber President Ann Hamilton.

Hamilton herself said she hadn't been aware of the proposal, which according to the 
nonpartisan Massachusetts Taxpayers Foundation "will lay claim to the most onerous 
computer and software services tax in the nation."

Richard Roth of TNT Global Solutions, a Greenfield custom software development firm, said, 
"I can't believe we all missed this. Obviously they stuck something in there that we all 
missed. It's definitely something that would shake us up a little bit."

According to Hamilton's email call for political action, the tax "strikes at the heart of 
the Massachusetts economy, costing countless jobs for years to come. Virtually every 
industry in the state will be affected by this tax, ranging from retail to life sciences 
to health care to finance."

The Taxpayers Foundation estimates the tax --- which only four other states levy --- will 
cost the state's employers an additional $500 million in annual sales taxes."

Among other effects, according to the foundation, "The proposal would tax efforts to 
improve health care quality and reduce costs --- another major administration initiative. 
Developing electronic health and medical records that can be shared across platforms will 
transform health care delivery. Whether these applications are custom built and installed 
at institutions or shared via a software as a service model over the Internet, they would 
be subject to taxation."

Timothy Farrell of Farrell Insurance in Greenfield said that even as a small business, his 
computer services budget is a significant part of his operating expenses. The new tax 
could cost the firm $2,200 in additional taxes, based on last year's expenses.

"It's so hard to wrap your arms aroundthis because it will be passed around multiple 
times," Farrell said. "It's going to impact businesses, but it's also going to impact 
consumers. For us, it's a big impact, but that doesn't even include, if I'm paying the 
additional tax, the people that I'm using as my IT service, and buy my software from, 
they're going to be paying it on their end as well, and that will increase my costs, which 
will increase my tax."

Sen. Stanley Rosenberg, D-Amherst, said the new tax has been discussed "for quite some 
time," and had received either the endorsement or statements of neutrality from a number 
of business organizations including by taxpayers foundation President Michael Widmer, who 
"offered no opposition when it was first laid out."

"The bottom line is, there's been a leftturn here, and there has been some growing 
opposition," said Rosenberg, adding that estimates by House and Senate Ways and Means 
Committee say the tax is worth $160 million, and the business community says it will cost 
about three times as much. "We have to let it play out and see what kind of revenue it 
actually produces.

"Other states have this tax," he added, "and the reality is it's built into the cost of 
the service, and most businesses don't do a major purchase of this kind of service 
frequently. It gets amortized over a long period of time."

Sen. Stephen Brewer, D-Barre, who chairs the Senate's Ways and Means Committee told The 
Boston Globe last week, "We heard precious little from the industry. There are people who 
could have weighed in earlier that we didn't see."

Mass Taxpayers issued a bulletin, dated March 19, which says, "Companies of all sizes rely 
on technology to improve and grow, and taxing it would add to their costs of doing 
business. Massachusetts already has the second highest business costs in the country, 
behind only Hawaii. The state's tax burden on businesses is the fifth highest in the 
country, according to the January 2013 report from the Greater Boston Chamber of Commerce. 
The state also ranks near the bottom for its difficult regulatory climate. Since so few 
other states have a similar tax, it would be one more factor that makes Massachusetts the 
most expensive place in the 48 contiguous states to run a business."

On the Web:https://malegislature.gov/Bills/188/House/H3535http://bit.ly/19iEz3LYou can 
reach Richie Davis atrdavis at recorder.com <mailto:rdavis at recorder.com>or 413-772-0261, Ext. 269


	
	/
Copyright © 2013 Greenfield Recorder 07/25/2013
/


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