Thursday, August 29, 2013

The "Tech Tax" has hit Massachusetts, and will surely impact your business. Help us take action now!

Massachusetts now has the highest and most aggressive technology tax in the nation at 6.25%. This is one time that being ranked #1 is not a good thing for anyone. This tax impacts many areas of information technology, including website development, software use and development, just to mention a few. It also applies to installing and configuring personal and business computers, servers, network devices, virus scanning software, Microsoft office software and much more where you will be taxed for both the software and now labor necessary to install and configure it.

Effective July 31st, the Massachusetts Department of Revenue has applied sales and use tax (6.25%) to previously untaxed computer/software services. Known colloquially as the "tech tax," these new taxable services include: the installation of computer systems (including servers, PCs, switches, firewalls, routers, etc), the planning, consulting, or designing of computer systems, and the installation, modification, or adaptation of most software. This new tax on technological services was written into the legislature, sections 48 and 49. An Act Relative to Transportation Finance.

Unfairly targeting the Information Technology industry, and completely unrelated to Transportation Finance, this new "tech tax" legislature is poorly written, poorly timed, and, as many argue, too reminiscent of previously failed attempts in this state to impose sales tax on services. Not to mention it has a potentially crippling effect on small businesses in Massachusetts.

We are working with our state representative and local groups to petition the State to repeal/revise this tax. The Mass High Tech Council has teamed up with The Massachusetts Taxpayers Foundation to further push for a repeal. There are also several blogs devoted to cataloging the repeal progress, including No Tech Tax and Repeal The IT Service Tax.

How the New "Tech Tax" Affects You
The DOR has issued guidelines and a FAQ explaining the new taxable services vs. nontaxable services. Please look at this to determine how you will be impacted. This means that any computer/software services performed after July 31, 2013 and falling under the new taxable definitions set forth by the Massachusetts Department of Revenue will be subject to an additional 6.25% sales tax.

What You Can Do
We understand the impact that this service tax will have on your business and personal computer services. If you wish to join us in a repeal effort, we recommend adding your signature to this online petition to help repeal this new law.

Please join me, John, and our IES family in the campaign to repeal this discriminatory sales tax:

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