The Tech Tax Baffles Even the Department of Revenue…and Needs to Go

0

Attorney Scott Foster, Jeff Rutherford and Don Lesser talk about the terrible Tech tax tonight in Northampton.
Attorney Scott Foster, Jeff Rutherford and Don Lesser talk about the terrible Tech tax tonight in Northampton.

I met with a group of software developers tonight and the topic was the onerous ‘tech tax’ that’s been imposed with a very short lead time on anyone in Massachusetts who uses ‘commercial software’ to provide services to people.  The good news is that the consensus from these members of Hidden Tech is that the legislature is already feeling the heat from the Department of Revenue that they’ve passed a law that nobody understands.

And people like our great state Senator Stan Rosenberg, who is on deck to be the president of the Senate, is wondering how they can undo what they’ve done. Now the governor too is agreeing we need to find some other way to raise money, He said that leaving this tax in place jeopardizes Massachusetts’ great high tech reputation.

The tax was part of the governor’s plan to raise revenues to fund transportation infrastructure, and in some ways, this tax was a compromise that lowered the taxes the governor wanted to impose.  It could have been much worse.  The tax went into effect on July 31, and on Sept 20, anyone who makes modifications to ‘prewritten software,’ ie, anything that’s sold on line or in a store, has to charge their clients sales tax.  If you buy the software on a disk, or license the software from the vendor, it’s the same–you have to charge sales tax on the client. That’s a mess.

Here is the dilemma. One web developer talked tonight about how he was working on a website today. First he used Dreamweaver to create some new pages (taxable) then he switched to Notepad to edit some text (not taxable) then he used an open source program to process some images (not taxable) then he switched to Excel to list the work that he did (taxable). How could this man possibly keep track of this and accurately charge the client the proper tax?

The point is that a law that’s passed that is confusing the Department of Revenue isn’t ready to become a law. Even now, there are questions and answers that are changing every day.  Even the DOR says that to keep up and accurately bill your clients you have to check back on their website daily.  Find out more by emailing rulesandregs@dor.state.ma.us