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: http://chn.ge/15jZmMV
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