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Massachusetts Enacts 6.25% Sales Tax On "Prewritten" Software Consulting

samzenpus posted 1 year,24 days | from the pay-the-man dept.

Government 364

First time accepted submitter marshallr writes "Technical Information Release TIR 13-10 becomes effective in Massachusetts on July 31st, 2013. It requires software consultants to collect a 6.25% sales tax from their clients if they perform 'computer system design services and the modification, integration, enhancement, installation or configuration of standardized software.' TIR 13-10 was published to mass.gov on July 25th, 2013 to provide the public a few working days to review the release and make comments."

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Wow (5, Insightful)

DeathToBill (601486) | 1 year,24 days | (#44411653)

Six days from the announcement of a new tax to being required to collect it? Really? How many businesses can change their processes that quickly?

Re:Wow (2, Insightful)

slashmydots (2189826) | 1 year,24 days | (#44411853)

It takes me about 5 minutes to change all our software to a new tax rate and that's in 5 different software suite. If they're all such a great IT consulting firms, maybe they should be able to as well.

Re:Wow (5, Insightful)

Penguinisto (415985) | 1 year,24 days | (#44411981)

It may take about 5 minutes to change tax rates in software, but I suspect it'll take a hell of a lot more than five minutes to update pricing policy, sales processes (and processing), to revise revenue/profit forecasts, modify forms (to point out this new tax, so you don't lump it in with generic sales tax), get the finance folks up to speed...

Re:Wow (2, Insightful)

Anonymous Coward | 1 year,24 days | (#44411995)

So you changed the "configuration of standardized software"? Did you remember to pay the new tax?

Re:Wow (0)

Anonymous Coward | 1 year,24 days | (#44412089)

Accept its pure theft! The State does not have a right to single out one group of businesses. This is nothing more than a common thug shakedown.

Re:Wow (4, Insightful)

Anonymous Coward | 1 year,24 days | (#44412233)

Governments have been "singling out one group of businesses" since Hammurabi first passed a tax specifically targeting breweries. That horse left the barn millennia ago.

Re:Wow (5, Informative)

skids (119237) | 1 year,24 days | (#44412349)

Note that this effects a bunch of freelancers that are used to providing an untaxed service, and so have no idea how to go about collecting sales taxes and sending the proceeds to the government, since all they did was collect check, report it as SE income, and pay the social security tax on it on a personal income tax form.

Re:Wow (4, Insightful)

phantomfive (622387) | 1 year,24 days | (#44412429)

It's not changing the tax rate, it's introducing a new tax that was never there before. And that's even ignoring the fact that you'll need a lawyer to interpret the law, and decide which types of job will require the new tax, and which will not.

Re:Wow (1)

Penguinisto (415985) | 1 year,24 days | (#44411899)

How many businesses can change their processes that quickly?

It won't be collected until the end of the tax year... just that you have to back-date it to the six-days-from-now mark.

Of course, it's going to cost a lot of consulting firms a buttload of money they didn't anticipate (especially if the word "Oracle" is in the specs somewhere), but you know, the government needs their monies (for the children, old, and poor, naturally - though the funds' ultimate destination may differ slightly from what was promised.)

Re:Wow (2)

vtcodger (957785) | 1 year,24 days | (#44412251)

It won't be collected until the end of the tax year... just that you have to back-date it to the six-days-from-now mark.

Not that I know squat about how sales taxes are collected in Massachusetts, but across the border in Vermont, you pay them, as I recall, quarterly and the amount isn't as much a problem as the fact that many clients -- schools, local governments, etc are tax exempt but you still need to report the sale and their tax exempt certificate number. Which means one more piece of data to collect and one more piece of paper to send to someone periodically along with a check. OTOH, most resellers would presumably already be set up to handle this stuff if they ever resell hardware.

Re:Wow (2)

cjm571 (2774139) | 1 year,24 days | (#44411925)

I remember hearing about this when it was first proposed, take a look at Sec. 7, Subsection AA below:
http://www.mass.gov/bb/h1/fy14h1/os_14/h7.htm [mass.gov]

The language there extends the tax to basically any software-related service you could possibly render. I find it surprising how hostile Mass. legislature seems to be towards the software industry, given the presence of MIT et al. and the countless tech startups that come out of these institutions.

Re:Wow (0)

Anonymous Coward | 1 year,24 days | (#44412081)

Not to mention that even though this money goes into a separate fund ...

There shall be established and set up on the books of the commonwealth a separate fund to be known as the Commonwealth Public Infrastructure Fund, which shall be used exclusively for financing public infrastructure.

... it can be expended for any other expenses included in:

the expenses of the commonwealth, debt service or other obligations of the commonwealth, or for grants to municipalities and other public instrumentalities for design, construction, building, land acquisition, rehabilitation and other improvements to publicly-owned infrastructure including, but not limited to highways, streets, bridges, railways, mass transit, pedestrian and bicycle ways, airports, water treatment systems, wastewater systems, seaports, seawalls, breakwaters, dams, flood control systems, beach replenishment, parks, telecommunications systems, solid waste facilities, public education facilities, public health facilities, public housing, military and public safety facilities, and courts.

Re:Wow (0)

Anonymous Coward | 1 year,24 days | (#44412329)

That reminds me of the fundraising solicitations that I get from my alma mater. I can check off a box indicating whether I want my donation to go to "general funds" or to "student financial aid only".

Of course, it makes no practical difference b/c the university can use a combination of tuition and non-restricted contributions to move whatever monies it wants into financial aid or faculty salaries, science labs, new athletic facilities, etc.

Re:Wow (5, Informative)

Chris Mattern (191822) | 1 year,24 days | (#44411947)

It's not a new tax. 6.25% is the general sales tax in Massachusetts. This is just a ruling clarifying, "Yes, it applies to you guys too."

Annnnnnd (1)

Anonymous Coward | 1 year,24 days | (#44411661)

Massachusetts companies simply start providing software as a service or remote desktop usage into offices in other states. All the ones with big numbers they'd want taxed involved anyway.

captcha: shopped

Only applies to prewritten software? (2)

EzInKy (115248) | 1 year,24 days | (#44411675)

Not sure I see a problem with that. Afterall, a reseller is a reseller is a reseller. Seems to me that it encourages creativity and innovation in those who wish to avoid the tax.

Re:Only applies to prewritten software? (5, Insightful)

gstoddart (321705) | 1 year,24 days | (#44411731)

It also applies to Open Source software. And, what if you're not a reseller -- "you buy Windows, and I'll install and configure it".

Sadly, I'm just going to assume there will be all sorts of problems here -- because most of the time when lawmakers try to pass laws relating to technology, they fail miserably in their understanding of said technology and make a bigger mess of things.

Re:Only applies to prewritten software? (0)

Anonymous Coward | 1 year,24 days | (#44411801)

The moment you type in the serial/activation number of the software, you alter the functioning of the software.

Re:Only applies to prewritten software? (2)

bws111 (1216812) | 1 year,24 days | (#44411951)

What does OSS have to do with anything? If you install, configure, etc software, and collect a fee for it, then you collect sales tax on that fee.

This seems to be specifically closing the 'not a reseller' hole. If you ARE a reseller, then you are already collecting sales tax on the thing you sell (which includes your value add). This is making so you have to collect the sales tax on your service even if you are not 'selling' the system.

It is no different than collecting taxes on any other service performed (eg cooking, barbering).

Re:Only applies to prewritten software? (0, Funny)

Anonymous Coward | 1 year,24 days | (#44412151)

It is no different than collecting taxes on any other service performed (eg cooking, barbering).

I'm a bald agoraphobic recluse who cooks for himself, you insensitive clod!

Re:Only applies to prewritten software? (3, Informative)

sinthetek (678498) | 1 year,24 days | (#44412257)

It is no different than collecting taxes on any other service performed (eg cooking, barbering).

To my knowledge most states don't tax for services (especially not as highly as sales are taxed). Have you ever heard of a musician or lawyer (or even your aforementioned chef or beautician) having to collect any sort of sales tax?

Re:Only applies to prewritten software? (1)

Anonymous Coward | 1 year,24 days | (#44411741)

And what happens when you build for example a system that contains apache, php, perl or plugins to existing software. Not just a reseller then.

Re:Only applies to prewritten software? (1)

Anonymous Coward | 1 year,24 days | (#44411779)

The boundary between "configuration" and "code" is often blurred. Some configuration files, especially installation scripts and build scripts can easily match the complexity of software. On the other hand, Java bytecodes can be viewed as merely a configuration script for standardized software (namely, JVM). This may sound ridiculous to us geeks, but when the decision is lodged with a government body trying to collect some money, rules of logic become surprisingly flexible.

Re:Only applies to prewritten software? (0)

Anonymous Coward | 1 year,24 days | (#44412163)

so you don't have a problem with getting taxed on something licensed instead of "owned" as in most pre-packaged software? You don't get the code to create, modify or maintain it yet are licensed to rent it but still getting taxed like it's a product you own.

Open software is interesting in that sometimes a company is hired to use open source software and spend lots of time reconfiguring or modifying it for use and all of that seems to be getting taxed too.

If you're purely reselling the software licenses that seems like it makes sense to try and extract some of those profits if you really want to tax lots of things. But as soon as the reseller also offers and provides software support for those packages this should be a tax limiter.

Elsewhere (1)

truthsearch (249536) | 1 year,24 days | (#44411677)

Anyone hear of anything similar being considered in other states?

Re:Elsewhere (1)

gl4ss (559668) | 1 year,24 days | (#44411695)

elsewhere in the world it's pretty common. sales tax on sold services.. 6.25 is nothing.

Re:Elsewhere (1)

Picardo85 (1408929) | 1 year,24 days | (#44411795)

Yeah, Finland for example, has between 10% and 14% VAT on all food, food services, services and culture (simply put) and 24% on products. The US should enact national VAT standards in three levels like Finland for example, IMO.

Re:Elsewhere (0)

Anonymous Coward | 1 year,24 days | (#44411887)

Yeah, Finland for example, has between 10% and 14% VAT on all food, food services, services and culture (simply put) and 24% on products. The US should enact national VAT standards in three levels like Finland for example, IMO.

Or not. Holy crap, that's a lot of taxes.

Contractors pay income tax. Done and done. If they need more tax money why not keep things simple and increase the income tax?

Re:Elsewhere (4, Insightful)

Penguinisto (415985) | 1 year,24 days | (#44412025)

If they need more tax money why not keep things simple and increase the income tax?

Seriously? How are you going to hide a tax hike if you keep it open and honest?

Re:Elsewhere (4, Insightful)

Githaron (2462596) | 1 year,24 days | (#44412125)

I think a prefer the opposite. Abolish the income tax and make a standard sales tax across the board. Plan the shift over several years in order to decrease the immediate impact of the switch.

Companies never pay taxes. They shift that burder to the customer through increased prices. Placing the taxes directly on the end user makes the tax system more transparent.

Re:Elsewhere (5, Insightful)

truthsearch (249536) | 1 year,24 days | (#44412363)

That results in the poor paying proportionately more taxes than anyone else since they use almost all of their money to purchase necessities.

Re:Elsewhere (2)

skids (119237) | 1 year,24 days | (#44412391)

If we're going to change things that drastically, lets just tax property. The actual enumeration of a persons property could be privatized if it were done through a mandatory property insurance system, so we wouldn't have the government walking through our living room and counting sofas, and the taxpayer would get some benefit (insurance) out of the process.

Re:Elsewhere (0)

Anonymous Coward | 1 year,24 days | (#44412245)

I would rather have a VAT than an income tax. It is far easier for people to dance around the law by shuffling figures. Far harder to hide that Maybach in the driveway.

Elsewhere Indeed (1)

ZombieBraintrust (1685608) | 1 year,24 days | (#44412263)

They want to shift the tax burden to poeple not living in Massachusetts. Most of the income is earned out of state. (California)

Re:Elsewhere (2, Insightful)

Anonymous Coward | 1 year,24 days | (#44411915)

The problem is that in the U.S. is that your probably already paying close to 8% sales tax (in my home town 15% on entertainment and liquor) and we don't get things like universal healthcare. Instead we get NSA spying and TARP (welfare for the rich).

I truly don't have trouble paying taxes, however, he the U.S. sorrily lacks real statesmen that care about the country and are good stewards of our tax money. That's why so many people here demand lower taxes without any thought about the impact of things like an underfunded education system.

While I understand the thought behind a consumer tax (stupid people can't calculate sales tax so they don't consider it part of the cost). Ultimately any consumer tax paid by every person regardless of where you place the tax in the system.. So why not be honest and fair about it and simply use income tax?

Re:Elsewhere (0)

Seumas (6865) | 1 year,24 days | (#44412463)

I'm assuming you're Finnish and that's why you don't understand how imposing a national sales tax would be contrary to the structure of this country.

Re:Elsewhere (1)

Penguinisto (415985) | 1 year,24 days | (#44412007)

Well, not here in Oregon.

We'd need to have an actual sales tax first, which thankfully we don't have.

Re:Elsewhere (1)

houstonbofh (602064) | 1 year,24 days | (#44412359)

Sales Tax in Texas applies to most forms of computer consulting. And it is complex enough that almost everyone just charges it all the time...

Re:Elsewhere (1)

Seumas (6865) | 1 year,24 days | (#44412441)

Collecting more taxes on every fucking thing under the sun?

Yes, I have heard of that being considered in all fifty states.

Tax rate ... (1)

PPH (736903) | 1 year,24 days | (#44411685)

... on custom software?

Re:Tax rate ... (1)

i kan reed (749298) | 1 year,24 days | (#44411863)

I think the idea is that custom software incorporates at least 1 well paid white collar employee paying taxes, which is a preferable result for the state's economy to someone just installing some software and charging $X,000 for it.

States really need revenue (5, Informative)

Anonymous Coward | 1 year,24 days | (#44411711)

If you've followed the Detroit saga, you'll know that many states have made deferred pension deals with their unions that are now coming due as the Boomers retire.

Some states, such as Michigan have deferred liabilities of 241% of their annual revenue. Massachusetts is in the top 10 "bad" list (100%).(source of this is Moody's BTW, and this has been reported in The Economist)

What this means is that retiree benefits will take up an ever expanding part of state expenditures, crowding out education, police, fire, parks, and other benefits that modern citizens have come to expect.

So states are hungry for any revenue, Maryland for example, has set up a rain tax to tax people for the amount of rain that falls on their property (Maryland is in the top 10 "bad" list right next to Massachusetts), so the idea that they'd tax something in a completely arbitrary and crazy way will become the Normal.

You're about to see a wave of municipal bankruptcies all across this country, and local taxes are about to go through the roof.

Enjoy.

Re:States really need revenue (3, Interesting)

gr8_phk (621180) | 1 year,24 days | (#44411753)

From what I can tell part of the problem in Detroit is that the pension funds invested in city bonds - a financially stupid move. So now if the city defaults on its bonds the pension funds are screwed. Had those funds invested in something sensible the problem would not be nearly as dire for the pensioners.

Re:States really need revenue (2)

Penguinisto (415985) | 1 year,24 days | (#44412127)

From what I can tell part of the problem in Detroit is that the pension funds invested in city bonds - a financially stupid move.

...it gets even better. Those city bonds were financed by a tax base that has been busy running like hell off to other cities and states. I think Detroit's population has shrunk to only 1/4 of it's 1950's peak... and that's in spite of population growth overall. To top that off, the remaining 1/4 doesn't include the wealthier folks (who were likely among the first to pull the D-ring.)

Politicions need to stop robbing children (1)

drainbramage (588291) | 1 year,24 days | (#44411757)

I see you haven't noticed but politicians spend more, no matter what the tax rate.
I trust you are consistent: The Titanic needs more icebergs, crackheads need more crack, Barbie needs bigger boobs.

Re:States really need revenue (4, Interesting)

Impy the Impiuos Imp (442658) | 1 year,24 days | (#44411781)

States are spending more than ever. Cut off taxes and choke them seems to be the only way. See also the federal government.

As for Detroit, politicians past promised future generations' money to support retirees, a very easy thing to do.

We were warned about this. It is a vector to failure. I've just popped some popcorn over the whole thing. The reason these things are having problems is the math is identical to why the Ponzi scheme was made illegal -- charging current investors little or nothing in exchange for giving them the investmemt of future investors.

These schemes just have the perversity of being able to force you to be an investor.

Re:States really need revenue (2)

darkstar949 (697933) | 1 year,24 days | (#44412229)

As for Detroit, politicians past promised future generations' money to support retirees, a very easy thing to do.

Which is how pension funds are not supposed to be run in the first place. If you run a pension correctly it should work more like a 401(k) in that the money goes into an account that you then don't touch until a certain date. For large organizations you can calculate out how much you need to fund an employee's retirement long before they even retire. The government would actually be the best suited to pensions since they can build up enough of a buffer over time that they should effectively be immune to fluctuations in the market and could eventually hit a point where they wouldn't even need to pay in to the pension accounts again. In short, bad fiscal management is the problem, no pensions themselves.

Re:States really need revenue (-1)

Anonymous Coward | 1 year,24 days | (#44411819)

Its just greed, just like greedy engineer salaries. Capitalistic greed. All the baby-boomer scum who hate capitalism love to exploit it, since deep down they are greedy just like software engineers who make more than 25K a year. Same goes for greedy unions. All greedy capitalists. Bring it all down boy.

Re:States really need revenue (1)

stenvar (2789879) | 1 year,24 days | (#44411827)

There will be many bankruptcies. There will also be many municipalities and states that have avoided these problems. And you have control over it: leave the places that made bad choices and move to the places that made good choices.

Re:States really need revenue (0)

Anonymous Coward | 1 year,24 days | (#44412097)

In theory, in the US, the limited federal government would have made such competition between the states work to prevent these issues.

In practice, the weakening of the constitution has empowered the federal government to tax the citizens of all of the states and redistribute the money as needed.

Re:States really need revenue (4, Informative)

PeeAitchPee (712652) | 1 year,24 days | (#44411837)

Maryland for example, has set up a rain tax to tax people for the amount of rain that falls on their property

It's worse than that. As a Marylander (not for long because of this type of nonsense), I can also tell you that the rain tax, like most other taxes rammed through in the last five years or so, does NOT have to go towards saving the Chesapeake Bay (the justification used to pass it). The revenue goes into the state's general fund, where it is pissed away by the politicians to do things like give state loans to sports bars [baltimoresun.com] . This is a huge reason why states like CA, MD, and MA are destroying their tax bases as people and businesses flee by the millions to more tax-friendly states.

Re:States really need revenue (0)

Anonymous Coward | 1 year,24 days | (#44412091)

This is a huge reason why states like CA, MD, and MA are destroying their tax bases as people and businesses flee by the millions to more tax-friendly states.

No. People may leave for marginal reasons to states that spend on better, but that will only be a marginal reason. Companies go wherever they get lower taxes, not to places where taxes are spent more efficiently.

Re:States really need revenue (0)

Anonymous Coward | 1 year,24 days | (#44412111)

This is a huge reason why states like CA, MD, and MA are destroying their tax bases as people and businesses flee by the millions to more tax-friendly states.

Yep: if you look at population statistics in the US, you will notice that one states growth dominates them all: Texas.

I wonder if that could possibly have anything to do with Texas's pro-business, anti-leech governing? Nah, couldn't be...

Re:States really need revenue (2, Insightful)

Anonymous Coward | 1 year,24 days | (#44412155)

California's population has been rising steadily for decades, and has increased by about 300,000 last year. Maryland and Massachusetts similarly have increasing populations.

This is not people and businesses fleeing by the millions.

Re:States really need revenue (1)

dcw3 (649211) | 1 year,24 days | (#44412271)

Mod parent up.

This is the reason I'm a former resident of the Socialist Republic of Maryland.

not a state (1)

ehiris (214677) | 1 year,24 days | (#44411973)

Detroit is not a state, it's a city which managed to shoo all its manufacturing jobs away. Now Massachusetts is going to shoo all jobs away to India.

Re:not a state (0)

Anonymous Coward | 1 year,24 days | (#44412131)

Well, technically neither is Massachusetts a state. Massachusetts is a common wealth.

Re:not a state (1)

thaylin (555395) | 1 year,24 days | (#44412241)

There is no difference in the US. A commonwealth is a state.

Re:States really need revenue (1)

jfdavis668 (1414919) | 1 year,24 days | (#44412087)

Detroit's problem is everyone left. Far less tax base then when all those pensioners retired. Only 3000 people paying into the retirement plan, and 9000 drawing out. With a much smaller population, you need fewer fire and police. Yet you still have to pay the police you used to need when there were more people living there. Detroit needs to rebuild so people move back and start paying taxes again.

Re:States really need revenue (2)

dcw3 (649211) | 1 year,24 days | (#44412331)

I grew up there. Detroit was, and still is one of the most segregated cities in the nation. People left for the suburbs to escape crime, crappy schools, and political mischief on the part of former mayors. The http://en.wikipedia.org/wiki/Renaissance_Center [wikipedia.org] was built back in 77 as a way to draw business back. The Lions and Pistons moved back, and casinos moved in. It's not enough though, and there's little that can be done now without flattening most of the blighted neighborhoods, and starting over.

Re:States really need revenue (1)

thaylin (555395) | 1 year,24 days | (#44412223)

Nice way to try and start start something there AC. The rain tax does not charge you for the amount of rain that falls on your property, but for how much surface area is impervious to taking in the rain water.

Re:States really need revenue (3, Informative)

roju (193642) | 1 year,24 days | (#44412471)

The impervious surface fee actually makes a lot of sense, and isn't simply a "rain tax".

Storm-water runoff is a negative externality that right now everyone in a community pays for regardless of their actual runoff. It's a tragedy of the commons - there's no incentive to minimize it. Charging a fee based on the area of impervious surface on a property converts that externality into a direct cost, rewarding those who minimize runoff and charging those who produce the most runoff more. A property owner need only replace impervious surfaces with pervious surfaces and they'll produce less runoff and pay less; everyone wins. It's the same idea as a carbon tax.

pretty broad (0)

Anonymous Coward | 1 year,24 days | (#44411721)

That could include anyone that installs linux on a box and then writes their own software on top of it, so pretty much any software developer who is working as a vendor to another firm.

Re:pretty broad (1)

stewsters (1406737) | 1 year,24 days | (#44411785)

This is my problem. They don't draw the line on what is pre-written and what is not. If you are not writing your own assembly code, are you going to be liable because your code is mostly pre-written libraries? If I write a .Net or Java application there probably is more code in the libraries than anything I customized.
It seems like this is fairly arbitrary, if they need money they should just put a small tax on all services. If you tax on something so arbitrary, only the honest companies will pay. The other ones will find a way to weasel out of it.

Re:pretty broad (2)

mmcxii (1707574) | 1 year,24 days | (#44411871)

if they need money they should just put a small tax on all services

Don't worry, it'll come to that. While I do agree that the slippery slope scheme doesn't work in every situation, the government has it down to an art. What's worse off is that this tax has nothing to do with anything in this system of business that is causing an undue burden on the government. They're doing it as just another money grab.

As a person gets fatter they need to take in more calories to maintain their fatness. As the government becomes fatter they need to suck off the production of the (for now) free people to maintain their overreach. In the long run, both lead to decreased quality of life and an early death.

Even I've heard of Taxachusetts (1, Troll)

OzPeter (195038) | 1 year,24 days | (#44411735)

Even I've heard of Taxachusetts and I don't live anywhere near it.

Re:Even I've heard of Taxachusetts (2)

i kan reed (749298) | 1 year,24 days | (#44411893)

Yeah, I don't think I've heard of anyone who actually lives in Massachusetts complaining about it. That's more of a southern republican narrative to talk about than an actual common complaint by the state's citizens. That's not to say no citizens complain, everyone hates paying taxes.

Re:Even I've heard of Taxachusetts (0)

Anonymous Coward | 1 year,24 days | (#44412055)

I guess you aren't paying attention--read the media outlets that publish the locals' comments instead of the media outlets that have a vested interest in higher taxes. (BTW, the argument from silence is one of the weakest arguments around.)

Re:Even I've heard of Taxachusetts (1)

i kan reed (749298) | 1 year,24 days | (#44412101)

1. Ok, just did. Checked boston globe, and a few other newspapers I hadn't heard of before. It doesn't appear to be a particularly common assertion about the story, and notably, the first comment I found seemed to be from Virginia.

This isn't an argument, it's a simple assertion about the OP's post.

Re:Even I've heard of Taxachusetts (2)

_xeno_ (155264) | 1 year,24 days | (#44412187)

Yeah, I don't think I've heard of anyone who actually lives in Massachusetts complaining about it.

You clearly aren't on my Facebook friends list, because people who actually live in Massachusetts (especially those of us who work in the software industry) are absolutely livid about the tax increases. Regular Massachusetts residents are mostly upset about the latest gas tax hikes that will simply increase their cost of living, but yes, this software tax has made the list of things people complain about.

Yes, people who live in Massachusetts are pissed about the pointless tax hike. Maybe not enough to actually make a difference, but if you leave the Boston reality-obliviousness-field, you will find people mad about the tax hikes.

Re:Even I've heard of Taxachusetts (1)

dcw3 (649211) | 1 year,24 days | (#44412355)

Far from it. I have family there, and it's where I heard the term.

Virginia, and other welfare states (0)

Anonymous Coward | 1 year,24 days | (#44411897)

It can be tough to keep taxes low when your federal taxes prop up states that take more money from Washington than they pay into the system. That includes your beloved Virginia:

http://www.economist.com/blogs/dailychart/2011/08/americas-fiscal-union

Re:Even I've heard of Taxachusetts (1)

darkstar949 (697933) | 1 year,24 days | (#44412311)

Massachusetts resident here and the taxes here are actually less than they are in states near by such as New York or Connecticut. Plus, there are a lot of people that regularly do such things as start voter-initiated ballot questions to get rid of the income tax [ballotpedia.org] . As far as services go, I've lived in other states that claimed to be (or actually were) fiscally conservative and you got what you paid for when it came to government services.

Relax, it doesn't apply to IBM (1)

Anonymous Coward | 1 year,24 days | (#44411743)

The application of the sales and use tax to Computer/Software Services will not apply to personal or professional services that do not themselves constitute computer system design services or software modification services and that are not directly related to a particular systems integration project involving the sale of computer hardware or software. Examples of such non-taxable personal and professional services may include (a) consulting and evaluation services with respect to existing computer systems to identify deficiencies and needs, and (b) services to prepare a business to use modified software, such as training.

Now I have no idea what that means, but I'm betting that that (or one like it) is one that was negotiated with the management of IBM and Microsoft to ensure that the tax won't apply to them.

So will pay the tax? Yup, the little guys.

BTW Mass. government employees, including state legislators, enjoy generous lifetime pension benefits of the sort that started vanishing in the private sector some 30 years ago. Those programs don''t come cheap.

What is the reason for this tax? (0)

Anonymous Coward | 1 year,24 days | (#44411751)

When do we get to stop trying to punish/reward various industries by taxing them irregularly. Why can't this be covered by a generic "business" or "consulting" tax, rather than be industry-specific?

Re:What is the reason for this tax? (3, Informative)

Tangential (266113) | 1 year,24 days | (#44411777)

A generic "business" or "consulting" tax would mean that (for example) lawyers would charge a tax on their services. What are the odds of a law like that passing?

Thanks, guys (1)

MikeRT (947531) | 1 year,24 days | (#44411755)

As a resident of Virginia, where taxes are low and there a lot of good software engineers employed tenuously in the government contracting business, I'd just like to say thank you to the Massachusetts legislature. Send your people here, have them write an interstate contract enforceable in Virginia not Massachusetts and reap the savings!

Re:Thanks, guys (2)

Impy the Impiuos Imp (442658) | 1 year,24 days | (#44411911)

Some of us disagree with the primacy of government as organizer of 1/3 of all existance.

"Let us decide what we want government to do, and then just tax to that level."

I would insert a .gif of someone eating popcorn if Slashdot were a bit more modern.

Of course, their next impulse isn't to fix themselves -- instead they long for control over every locality so. there's no where to flee to . The "problem" is thet you still have the freedom to vote with your feet.

So system administration consultant sales tax ? (1)

a_n_d_e_r_s (136412) | 1 year,24 days | (#44411759)

So why do they want to enforce making it more expensive to have secure computers ?

Why only on computers ? why not a sales tax on for example plumbing ?
Cause everyone needs to take a dump so should be a profitable tax.

However since its only on standard software and open source is nonstandard
I'm gonna presume its just a tax on those selling Microsoft software admin services.

Re:So system administration consultant sales tax ? (0)

Anonymous Coward | 1 year,24 days | (#44411839)

Why don't they tax the software companies when they sign state contracts, or do work for the state? It is a little hypocritical to only punish businesses that are getting certain services, for them it is a necessity. It would make more sense to punish software vendors, and businesses with a tax if they do not upgrade or keep good security.

Not to sound bad .. but (0)

Anonymous Coward | 1 year,24 days | (#44411843)

Look, I will be the first to admit I did not RTFA, but I don't see anything wrong with this. Not because I am for government taxes, but if they are just taxing software sales, then it is just closing an existing loop. I see it like this. Me, as an individual go to best buy and buy windows 7. I get taxed on it. As a corporation, I buy windows 7, and I am not taxed on it if I purchase a $10k from their consultants to configure it. It is a win-win for MS and companies. No taxes paid, they get $10k in configuration and MS gets an additional $10k in revenue. This is the hole they are closing. If you buy software from a company like Oracle, MS, or many smaller houses, you pay taxes on it. When I was working for a consulting firm, this was the sale, especially when you are selling $300k worth of software.

Now if they are saying that they have to collect sales tax on the $10k - that I disagree with.

Captcha: Untested :)

Golly (2)

Impy the Impiuos Imp (442658) | 1 year,24 days | (#44411965)

The sales tax should be on the software, not on the additive consulting or installation or customization charges.

Follow the money. Government just wants your money.

Hey MA programmers! Move to NH. (5, Interesting)

odigity (266563) | 1 year,24 days | (#44411967)

We're just over the border, and we promise not to pull any shit like this on you.

Why? It's simple: http://freestateproject.org/

Re: Hey MA programmers! Move to NH. (2)

glennrrr (592457) | 1 year,24 days | (#44412065)

I used to work in MA and it was a wonderful day when I saw 0 under state income tax on my first NH pay stub.

Re: Hey MA programmers! Move to NH. (3, Insightful)

Thavilden (1613435) | 1 year,24 days | (#44412393)

And have you paid your property taxes yet?

Re:Hey MA programmers! Move to NH. (1)

jfdavis668 (1414919) | 1 year,24 days | (#44412099)

The tax is on software consultation, not programming.

Re:Hey MA programmers! Move to NH. (1)

bedroll (806612) | 1 year,24 days | (#44412339)

This is likely a maneuver against such tax-sheltering movements. By taxing consulting you remove some of the incentive to use consultants versus having in-house employees. Not much, but it's there. Chances are if your consultancy wants to do business with an MA company they will be subject to this tax on their services.

Re:Hey MA programmers! Move to NH. (1)

codebot (80901) | 1 year,24 days | (#44412437)

But what this hurts is the small to mid-size shops that cannot afford in-house employees for their various IT services.

Let's call this the Acquia tax (3, Interesting)

techsoldaten (309296) | 1 year,24 days | (#44411983)

I think I know the origin of this tax bill and what it is intended for.

Acquia - http://www.acquia.com/ [acquia.com] - is a large firm that specializes in Drupal. A lot of the work they do is around setting up, configuring and maintaining Drupal websites.

While they don't produce the majority of the code that is in Drupal, they do provide a lot of services around it to consumers and other businesses. This is really a tax on VARs and other people who implement Drupal using their services.

I am sure there are a lot of other companies that operate in a similar space. While I don't like it, I can see the potential revenues to be drawn in through such a tax.

I reread this several times. (1)

intermodal (534361) | 1 year,24 days | (#44411989)

I still have no idea what it means.

Here in Texas, services are not considered a "sale". I'd have to provide some kind of product for consulting to be taxable here. It's why I keep no inventory, and I require my clients to acquire their own hardware (I'll gladly tell them exactly what they need).

Re:I reread this several times. (0)

Anonymous Coward | 1 year,24 days | (#44412135)

I still have no idea what it means.

Here in Texas, services are not considered a "sale". I'd have to provide some kind of product for consulting to be taxable here.

That's the point. Businesses are charging for installing and setting up software rather than the software itself, and then classing the invoice as tax-exempt consulting services rather than the taxable supply of a product, even though the product is standardized and pre-written without specific reference to that client.

Re:I reread this several times. (1)

intermodal (534361) | 1 year,24 days | (#44412193)

Ah, but if they don't actually sell anything, they're not providing a "sale" in the legal definition. That's why it's not covered under a sales tax. Either tax services, or do not tax services. It's as simple as that.

Memetic value? (1)

Millennium (2451) | 1 year,24 days | (#44412109)

"Prewritten software consulting"? It's like the double rainbow of taxes: what does it MEAN?!

Taxachusetts (1)

JustOK (667959) | 1 year,24 days | (#44412181)

nuff said

Americans and Taxes (0, Troll)

Silvrmane (773720) | 1 year,24 days | (#44412243)

You know what I love to read about? Americans bitching about their taxes. Their infrastructure is falling down all around them, their schools, police, fire departments, utilities, etc. are all chronically underfunded. But lawdy lawdy, don't dare raise their taxes to try to FIX some of this stuff. From the outside looking in, all this complaining just seems so... what are the words? Stupid and shortsighted.

Re:Americans and Taxes (0)

Anonymous Coward | 1 year,24 days | (#44412327)

Lawdy! Lawdy! It'd be nice to see a sincere attempt at fixing some of this stuff somewhere along the line. Until then...

Re:Americans and Taxes (1)

PeeAitchPee (712652) | 1 year,24 days | (#44412403)

I have no problem with paying taxes to fund something -- but the gov't damn well better use the money it takes from me to do EXACTLY what it's supposed to. The problem arises when the politicians say they'll use the funds for X, but there's nothing in the new tax that actually REQUIRES them to spend the new revenue on X, so they piss it away on pet projects and favors owed to the special interests who got them elected, and come back the next year and say, "we're still broke, and still need to fix X." That's the same as theft in my book. Social Security would easily be self-funding if the goddamn politicians stopped stealing from it!

This could make them billions! (0)

Anonymous Coward | 1 year,24 days | (#44412333)

The phrase "configuration of standardized software" sounds a lot like "using a cash register" to me!

Sales Tax (0)

Anonymous Coward | 1 year,24 days | (#44412459)

The trend is for states to make services taxable. This is just one slice of the salami in that direction. I can't think of a way to distinguish standardized software consulting from any other kind of software consulting.

Specific (1)

wisnoskij (1206448) | 1 year,24 days | (#44412469)

This all sounds overly specific.

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