
Denver's tax on web and app development draws ire from software execs - cdr
http://www.denverpost.com/business/ci_26006092/denvers-tax-web-and-app-development-draws-ire
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mschuster91
> "If we go out to Westminster to go to Costco to buy sodas for employees in
> the office in Denver, we're on the hook to pay the difference between the
> sales tax in Westminster and the sales tax in Denver," said Stefan Ramsbott,
> 303 Software's co-founder.

Is this supposed to be a joke?! Seriously, what kind of bullsh.t is this?

I accept having to pay VAT and customs when importing stuff from another
_country_ , but from another _city_ in the _same country_?

Sorry, but the way I see this is as a perfect thing to (ab)use as a government
if you want to crack down on someone... don't enforce it, only when doing a
"random tax compliance audit"...

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patio11
This is virtually universal for sales taxes in the United States -- they're
all paired with "use taxes" which you're supposed to calculate and remit
yourself. It is, far and away, the least complied tax in America. People
occasionally get prosecuted for it, largely when a high-dollar transaction is
intentionally effected in a low-tax jurisdiction to avoid sales taxes. The
canonical example is rich folks in New York buying art in Connecticut.

~~~
RyJones
Boeing hands over airplanes in Portland (PDX) to avoid Washington's sales tax.

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rexreed
As much as I find these taxes ridiculous (and also hard to predict for a
business owner), Couldn't they just add 3.62% to their billed costs to cover
those expenses? On a $100k software gig, this would be just $3620 or so. Round
it to $105k and they should be pulling in the same amount. On $10k it's just
$362. So that would maybe shift a $10k project bid to $10.5k to cover those
taxes and still bring in the same net to the company. Would that really make
them uncompetitive? "Cost of business" and all that?

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x0x0
Why are these taxes ridiculous, unless you don't support the idea of taxation
at all? Lots of economic activity gets taxed, and fundamentally, if we want to
have nice things (roads, utilities, public education, police, court system,
etc) _someone has to pay for them_. It's more than reasonable to want
businesses -- which use many of the above, and crucially rely on eg good
public schools to get parents to live and work near the business -- to chip
in.

That said, saying a 3.6% tax makes a software business uneconomical is pretty
silly. If that makes the difference between profitability and unprofitability
either the business was mostly investing profits internally into growth or was
nearly uneconomical anyway. It mostly sounds to me like bitching that the
owners may have to settle for Hawaii instead of St Barts this year.

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alistairSH
For me, it's not that these taxes, in particular, are ridiculous, but that the
tax code is so freaking complicated, that I sometimes need a CPA to double-
check my records (AMT, odd-ball deductions, etc). And this is for my personal
income taxes - it's even worse for business owners.

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_delirium
Does anyone have a list of which states consider web/software/tech services to
be subject to sales tax? I know Texas does [1], but haven't found an overall
list.

[1]
[http://window.state.tx.us/taxinfo/taxpubs/tx96_259.pdf](http://window.state.tx.us/taxinfo/taxpubs/tx96_259.pdf)

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fred_durst
Quick back of the napkin here. $35K a quarter. If that is the sales tax at
3.62%, then this company is bringing in just under $1 Million in revenues a
quarter.

Its possible that its not what the full $35K is for, but if you are bringing
in $4 Million a year in revenue, you can probably afford a qualified
accountant to take care of this stuff and I can't be all that sympathetic.

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gnoway
This article doesn't say anything about it, but I wonder how these businesses
were handling their taxes in the first place. Helping you avoid these
scenarios is one of the things a good CPA firm does.

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CugelTheClever
This is Matt from 303 Software. We pay our taxes in full and on time. Our two
accounting firms and one law firm had never heard of this tax until the
auditor showed up at my door. And sadly we weren't the only ones in Denver who
thought they were in compliance.

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CugelTheClever
Hi folks, this is Matt from 303 Software, the dev shop in the article. Happy
to answer your questions here.

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robgibbons
This is some BS. Services are not usually taxed. Production of software is a
service, there are no physical products.

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_delirium
Some states do tax services (sometimes with some exemptions). Other states
don't tax services, but do tax sales of digital goods, such as iTunes
downloads, ebooks, or apps. There's no blanket "sales tax = physical goods"
rule (it's not clear why there would be, especially in cases like ebooks vs.
paper books).

