
The Massachusetts Software Tax - neilkelty
http://www.fastcolabs.com/3015446/why-were-so-frustrated-about-the-massachusetts-software-tax
======
patio11
_And it’s not just Massachusetts developers that have to deal with this. It’s
anyone who has clients who have “software” that is being “used” in
Massachusetts._

Talk to your lawyer if you doubt me on this one, but Quill vs. North Dakota
means that it is the well-settled law [+] of the United States that you cannot
be liable for sales or use taxes enacted by a state which you don't have a
"nexus" in. What exactly constitutes a "nexus" can be hazy, but the punchline
for the overwhelming majority of HNers is that if you do not have an employee
who performs work for you within Massachusetts you almost certainly do not
have a nexus there.

Theoretically HN users who are also Massachusetts residents will have to start
remitting use tax to the state to cover purchases of covered which they made
from out-of-state merchants. It is an open secret that compliance in the US
with use taxes is nearly zero.

\+ Well, until they pass that threatened Internet tax legislation.

~~~
mjn
> the punchline for the overwhelming majority of HNers is that if you do not
> have an employee who performs work for you within Massachusetts you almost
> certainly do not have a nexus there

If you're a consultant who does work on-site for an MA client, that may also
establish a nexus. In some cases it can do so even if you don't physically
travel to MA, since the services can be deemed to have been rendered in the
client's location. But others are deemed to have been rendered in the
consultant's remote location. It's a little conceptually (and legally) unclear
where remote services "happen", and seems to depend on the state and the
service and the precise consulting relationship.

~~~
will_work4tears
Conventions that are work related and you work at a both promoting your work
or products counts as well it seems. I had a client that went to Vegas several
times a year for a convention and just running a booth made Vegas a nexus for
him.

------
rayiner
Unfortunately Mass. has unfunded pension liabilities exceeding $20 billion
(not including municipalities), and unfunded health care liabilities exceeding
$45 billion (including municipalities. At the same time, states will have to
deal with the new normal, which is lower economic growth indefinitely and
lower returns on invested assets.

As a result, states will ratchet up taxes to cover their increasingly
untenable budgets, as we've seen in Illinois (which recently almost doubled
its state income tax) and Mass.

My guess is that this process will accelerate the internal migratory trends
that are already in place. E.g. Nebraska, which banned defined-benefit
pensions in the 1960's is sitting pretty with $43 of unfunded liabilities per
person. Relevant to tech, the following states have big research universities
(and thus a supply of educated workers) and also relatively manageable
unfunded liabilities: Pennsylvania, Michigan, Wisconsin, Texas, and North
Carolina:
[http://www.nasra.org/resources/Moodys1101.pdf](http://www.nasra.org/resources/Moodys1101.pdf).

~~~
cinquemb
_Unfortunately Mass. has unfunded pension liabilities exceeding $20 billion
(not including municipalities), and unfunded health care liabilities exceeding
$45 billion (including municipalities. At the same time, states will have to
deal with the new normal, which is lower economic growth indefinitely and
lower returns on invested assets._

Is there any place where one can read about this/ any place where one can see
data? Now that we are in the new normal and have seen cities like Detroit go
bankrupt, maybe states are facing the chopping block as well (depending if
they can still afford to make payments on their liabilities). It will be
interesting to compare other places based on their financials as well.

~~~
kmfrk
Chicago is also boned in the future:
[http://mobile.nytimes.com/2013/08/06/us/chicago-sees-
pension...](http://mobile.nytimes.com/2013/08/06/us/chicago-sees-pension-
crisis-drawing-near.html).

EDIT: Alternatively [http://www.suntimes.com/news/cityhall/21642911-418/city-
defi...](http://www.suntimes.com/news/cityhall/21642911-418/city-deficit-to-
hit-nearly-1-billion-soon-without-pension-reform.html).

Keep in mind that Detroit had loaned money from other states that aren't
likely to get it back.

~~~
cinquemb
Do states and cities release data like this for the public to see (kind of
like open gov api's in csv/json/xml)? I wonder how many more cities/states are
taking loan money from other cities/states and are facing the gaping holes in
their budgets? It would be pretty cool to throw something together and put it
up on github.

~~~
smsm42
These data are probably available buries somewhere in periodic financial
reports that many cities publish, but as far as I know, there's no common
format, many of these reports are not well readable by tools (best case -
nicely formatted PDF with numbers buried somewhere within, worst case - PDF
scan of some typed pages with numbers buried within) and as far as I know no
site that actually aggregates these data into one database. Given the variety
of funds, arrangements, regulations and other things, it would not be very
easy to create such a database, probably would require a very large
investment. And since it the initiative for local authorities to participate
in it is next to zero (worst case, it will expose them for criticism, best
case they're OK but not getting any benefit) it would probably very hard to
pull off. I'd be glad to be mistaken on this.

~~~
cinquemb
I think you are spot on. I've been searching, and mostly coming up with PDF's
(that do give the overall numbers) with very little break down for cities.

It's a pity that with all the hand waving over Open Gov initiatives that
things like this are still buried, while I can easily find out all the
different colors of street lamps implemented for the past 10 years for xyz
neighborhoods…

~~~
smsm42
Feds probably could use the power of federal grants (or withdrawal of such) to
make much more order in this area, but I guess politicos are busy with more
interesting things than getting some data in order.

~~~
cinquemb
Well it could help with getting a sense of spending budgets and allocating
resources to states/cities more appropriately, but I guess we have the Federal
Reserve for that.

Well I had an idea to convert the PDF's to text, so now i'm working on
structuring it and filtering so maybe i can extract some values using some
kind of financial dictionary/ statistics techniques.

------
tehwalrus
This is _insane_. Either add a sales tax (fixed %) to _all_ B2B transactions
(like UK VAT, which you're exempt from if you're tiny) or just don't.

This minefield of regulations about what's taxable and what isn't will just
make it much more expensive to sell things, as people pay for
lawyers/accountants to figure out what "tax" to add to every outgoing invoice.
Since this will decrease consumption, it will reduce other tax revenues, as
well as making this pot smaller.

Mad. Stark Raving.

~~~
neltnerb
Agreed. I run a small business (thankfully not doing software) in
Massachusetts. I don't mind collecting sales tax, but when they make it an
overhead nightmare it's impossible to figure out. I'm just one person; when
your revenues are in the $10k range, hiring someone to figure it out is
impossible. If they just charged a fixed rate for everything it would at least
not so heavily favor big business over small companies.

I'm also confused because it seems that most of the reasoning is that
companies sell the software for cheap and then make the service contract
expensive. I've seen this done by companies like Autodesk and National
Instruments for sure, so I can see why they'd dislike it. I design custom
equipment, and I'd be tempted to do the same (charge at close to cost for
equipment and charge as a service for labor). But this seems like an
incredibly poorly conceived way to fix the problem that will cause more issues
than it will address, and it's surely not limited to software. I could pull
the same trick in any kind of contract work.

~~~
mvc
> software for cheap and then make the service contract expensive

If the software is cheap, it _is_ expensive to service it.

~~~
pc86
I know what you're saying, but I think his point was if you spend $100k
developing software, sell it for $100 and sell service contracts for $10k
instead of selling it for $5k with a similarly priced service contract.

------
hqsavvy
I ran a consulting business in Ontario Canada from 1999-2004 Today the
provincial sales tax is included (harmonized) with the federal sales tax as
the HST (8% + 5% = 13%) but back then they were charge separately as PST and
GST. Each tax act treated software and software services differently.

When we started we were compatriots with many such contractors in the city.
They said, confirmed by our accountant, that our services were not PST
eligible so we collected and submitted only the federal GST. This we did for 5
years without any incident; like an audit from the province.

In 2004 our business failed and we were in the process of closing up shop when
the feds audited our GST history and found that in 2001-2004 our GST
submissions were off and we owed about 30k incl interest and files. We made
arrangements to pay the bill. Painful but under control.

But, the federal audit triggered a provincial audit and that's when we
discovered that the rules for PST regarding software/it services had changed
during our run, making the work we did subject to the 8% PST. The rules for
that are eerily similar to those described in the OP.

The provincial government determined that the changes to The Act were
retroactive and covered all the business we ever did and that with interest
and penalties we owed over 700k payable by the end of that week or they would
take action. The company was broke so he action we were threatened with was
that, as officers of the company, we were personally liable for the amount and
that if not paid by the end of the week, our personal bank accounts would be
frozen. This was not good.

Further we found out that at that time, these rules were only enforced when a
PST audit occurred. So, when we told the many contractor pals in town that
this could be a problem for them. a) they didn't believe it, and b) AFIK none
of them changed their practice of collecting only the GST.

Anyways, there was a loophole where a customer could assume the liability for
the PST by giving us a waiver form. Luckily the majority of our work was with
one customer, a huge corp, who agreed to do this and we were off the hook.

It was a very stressful week.

PS. I have not done any consulting since 2004 so I am not aware of any
subsequent changes to The Act. AFIK, none of the contractors I know were
dinged the way we were. I figure that harmonization of the taxes means they
are collecting tax for both govt entities now.

~~~
tempestn
Your customer voluntarily offered to give away $700k out of the kindness of
their hearts, to help the officers of a failed former vendor? Regardless of
the size of the corporation, that's pretty incredible. Any idea why they
agreed to do that?

~~~
hqsavvy
Simple. Our former customer is a megacorp and their legal department was not
worried about it.

[added] The definition of "taxable service" may or may not have applied in our
case. We were without resources to challenge the fact so as far as we were
concerned the ruling and payment demand would stand as presented. The mega
corp was so large that they had a legal department devoted to minimizing tax
and this was just one more thing that department dealt with. A very small
thing in relation to the overall dealings of the customer.

~~~
tempestn
For sure, it just seems like the megacorp's legal department would be more
likely to decide that the easiest way to minimize the tax was to not
voluntarily accept it in the first place.

------
dsr_
MA resident. The biggest problem with this is the timing: tell us in July that
it goes into effect on January 1, we can deal. Tell us it goes into effect in
a week? Hah.

~~~
loumf
That and the fact that the line between custom software and customizations of
pre-written software isn't very clear (or if clear, draconian). The way they
wrote it, a custom WordPress template sounds like a customization (therefore
taxable), but a site not hosted in a CMS is custom (non-taxable).

------
pkmehta
This is going to increasingly become common esp as governments try to cover
budget gaps. We just went through a sales tax audit for our SaaS company and
so are expecting a good size bill for taxes not paid + penalties. Yes - fun
stuff.

Honestly, the gov't folks are playing whack-a-mole here trying to keep up with
fast-growing areas that don't fit the old "you sell this widget for $X" model
they're used to. And so they're going to write overly broad rules as they
don't understand technology and related industries. There is no intrinsic
reason that SaaS should be free of tax and so the more worrying aspect of this
legislation (NY has similar) is that it is so difficult to understand and open
to interpretation and the mental tax it imposes on businesses who live in a
cloud of of uncertainty about how they should treat their revenues.

That said, I think the idea that it will drive biz out of the state is naive.
California is not a particularly biz friendly state in terms of taxes but the
Valley and even LA seem to be doing just fine.

~~~
MetaCosm
I stopped working with a client already over this. Simply put, cash-flow wise
I can't currently risk taxes and penalties. It turned a customer into a
liability because of the horrible wording and unclear guidance (seriously,
they want us to pro-rate by the % of our software used in the state?).

I suspect many other small start-ups will make the same choice we did until
this all gets sorted out.

~~~
grumps
Out of curiosity - what made you feel that burden was placed on your company?
From what I saw if you didn't have a MA tax ID and didn't have a physical
presence in the state that burden would be placed on the purchaser.

Personally I read that it's kind of like sales tax, and buying online. If the
seller doesn't do business in the state you reside it's up to the purchaser to
pay the tax.

~~~
MetaCosm
My lawyer was unable to assure me of this -- the law is terribly written. Due
to the nature of the data worked on, I have to travel to MA and do a major
component of the work on site.

My understanding is "rewording and clarifications" are coming. I know my
client (employes hundreds of people) has unleashed a bit of hell over this --
we will see what will happen.

------
asmithmd1
I don't understand how they singled out software developers. Why not lawyers
or landscapers or pool service.

Why not tax something that no one likes that can't move out of state - TV and
radio ads?

~~~
chalst
What makes you think this only applies to software developers?

I provide editorial and publishing consulting - I don't write code to sell,
but I do configure and patch other people's code. Am I covered by this law?
Well, I guess I am.

Easiest solution for me: don't accept clients in Massachusetts.

~~~
troels
Oh you can accept them alright. Just recharge the extra tax to the customer,
if they're from MA. You don't even need to worry about if it applies to that
particular invoice or not - Just add it in any case.

~~~
Daniel_Newby
Assessing a fee under false color of law is a serious crime.

~~~
troels
I wouldn't suggest that you keep the funds for your self. You could just pay
it through in any case - I'm sure the MA tax department wouldn't mind. And I
would also assume that to be a lawful practise.

The point is that you make it clear why your customers are being charged
extra. It's then up to them to contact their local representatives and ask
them to change the law. If you're not based in MA, it's not really your
problem. Sucks for businesses in MA of course.

------
skrebbel
Wow, so if I run a SaaS from, say, the Netherlands, I'm going to have to pay
Massachusetts some kind of extra income tax? What if I don't even know where
my customers reside?

The US just became a little more EU. Congratulations!

EDIT: I meant 'import tax' where I wrote 'income tax'. Sorry for the
confusion.

~~~
mjn
It's not an income tax, it doesn't apply to hosted services, and it doesn't
apply to companies not doing any business in Massachusetts.

The people this impacts are those currently consulting for MA clients in a
capacity that was not considered software sales previously, but now might be.
For example, if you sold an analytics package in boxed software, that was
always clearly a "sale" and is unchanged. But if your business is based
around, for example, having a free SaaS analytics service, along with an offer
that enterprise clients can pay you to get a self-hosted version installed on
their own servers, that has typically been treated as consulting in MA, but is
being reclassified as selling software. The theory is that you are basically
selling software (a copy of the analytics package), not really consulting, and
the fact that you didn't put it in a box with a bar code is irrelevant. The
complaints are largely based around the vagueness of the definitions and the
short notice of implementation.

------
crazygringo
I can't find the link to the previous HN thread about this (and Google isn't
helping), but someone had posted that the whole point of this tax was to
essentially close a loophole where normal software sales are taxed, but a
consulting firm who makes a tiny tweak and sells the software under
"consulting services" because they "install a solution" for the client,
doesn't charge sales tax.

So if that's accurate, it makes perfect sense. Of course, crafting a law that
actually targets this and this only is extremely hard to do, and the short
notice here is ridiculous.

But if that's the actual motivation behind the law, it's just a case of where
do you draw the line between selling products (taxed) and selling services
(not taxed)? Of course there's a gray area between them.

~~~
techiferous
The motivation of the law is to raise revenue for transportation, not close a
legal loophole.

------
brokenmusic
Until people realize that all taxes are theft, they're doomed to have new
taxes imposed on the most productive of them. It's really a simple test to see
whether taxes are theft or not: if there was no way for IRS to find out how
much money anyone made, would people still be paying taxes? My guess is that
90% of people who preach about the social contract and helping the poor would
keep the money.

~~~
crazygringo
If taxes are theft, then your use of roads, police, courts, eating at
restaurants approved by health inspectors, and much more -- that's all theft
of your own.

Sorry, but taxes are not theft in any general way, by any stretch of the
imagination.

~~~
thallium205
It takes some seriously deep-seeded, institutionalized indoctrination
assaulting your mind through most of your life to believe taxation is not
theft.

If you do not pay your tax, violence is threatened and will be brought upon
you if you do not comply. This is theft. It does not matter if the thief uses
it for altruism. It does not matter if the thief forces roads and other
services upon you by outlawing competition.

The fact remains that the initiation or even the threat of violence against an
otherwise peaceful person is wrong, and trying to argue otherwise is an
indefensible position.

~~~
marvin
You are free to go off-grid and live in the woods, free from the shackles of
taxed services like roads, police protection and tap water. If you still make
enough money to pay tax, you'll still technically be breaking the law - but I
doubt anyone is going to come into the forest to put you in jail. So in
practice you'll be free and clear.

You could also go to a nation in sub-Saharan Africa where there is in effect
no government. No taxes! Except for the armed bandits which will take away all
your stuff. But surely you can pay out of pocket for a professional defense
force to take care of that problem.

~~~
brokenmusic
Surely no private company can ever come up with such technological marvel as
taps and tubes and water in them.

~~~
GabrielF00
Private companies are beholden to private interests. Government is beholden to
the public at large. Sure, a private company could design the infrastructure
behind the municipal water system, but are they going to design it and price
it and service it in a way that serves everyone or are they going to design it
so that they maximize profit even at the cost of, say, making it really hard
for poor people to get running water? If Comcast ran the water system they'd
make basic service very expensive for poor people, they'd constantly try to
upcharge you (you'd pay the same price for hot and cold water taps as you
would for the triple-play bundle of hot water, cold water, and carbonated
water) and they'd return the profits back to the shareholders rather than
investing them in improving their infrastructure.

~~~
brokenmusic
You can only vote once in 4 years. I, on the other hand, can stop paying any
private company at any point in time if I believe a company hurts me or other
members of the society. I don't see how that situation makes a company less
accountable.

In practice, private companies don't need to maximize profits at the expense
of poor. In Russia, for example, ISPs are competing hard against each other
and internet is dirt cheap, you could have a 30mbps connection for around
$7/mo. No regulation.

But suppose you're right. Suppose companies would maximize profit and the way
to do it would be by not providing service to poor people. It doesn't make it
okay to steal money (in the form of taxes) from me. Ask me nicely and give me
a REAL option to not pay, and I may as well pay even more than required. But
IRS are not nice people. They make people's lives difficult at the slightest
hint of tax evasion.

------
blahedo
Holy crap, everyone here needs to take a deep breath. And, preferably, look at
the law itself (not just this article). Despite the author wringing his hands
and clutching his pearls about how this law is soooooo hard to understand,
it's really not that complicated. It's a sales tax. It works like sales taxes
tend to work, with similar distinctions between industrial product (sold as a
good) and bespoke construction (sold as a service), and with similar handling
of inter-state purchases (if you have a nexus in MA and sell to someone there,
you collect, and if you don't have a nexus in MA, they're responsible for use
tax).

Let's not mistake the fact that people don't like taxes for some sort of deep,
abiding flaw in the legal situation.

(Now, the complaint that implementation was too sudden, that's totally valid.
They should have had a several-month gap between passing the law and the tax
kicking in.)

~~~
loumf
I am generally sympathetic to this point of view -- I am not against sales
taxes, and as someone who has been in shrink-wrapped software for most of my
career, I've had to deal with sales tax pretty much forever (and it's not a
big deal, unless you have to deal with WA's per county rules)

In this case, though, they are charging sales tax on _some_ services (that's
what the law is about). It has to do with services tied to "goods" or pre-
written software. So, integrating, customizing, installing, etc.

I believe that this is the area that might get amended or clarified soon (I
have written the MA DOR about it, as I know many have). They need to clarify
the line between bespoke and pre-written but customized a little better.

Also, I've heard a few time (but don't know if it's true) that this law is
modeled on laws in 24 states. If true, then a lot of people on this list are
probably supposed to be dealing with this already.

------
IanDrake
I live in Mass, but my consulting company is in CT. My current client is in MA
and I do some work for them on site.

I read the law and best I can tell, I don't qualify for this. It seems to be
centered around "pre-written" packaged software. I'm writing it right now, so
how can it be "pre-written"?

I won't pay this tax until I hear a valid argument that doesn't start with
"Well, to be safe...". I'm not paying the state protection money to be safe
from vagueness of their laws.

~~~
loumf
If you are writing totally custom software, you are exempt (IANL -- but, it's
pretty clear in the FAQ). If you customize pre-written software, you might
have to collect/report tax (that's where it's vague what customize exactly
means).

Using a library isn't customizing, according to the FAQ -- as long as the work
done to use it is < 10% of the total project. So, if you take 5 months to
write an iPhone App, then you need some library, and you download it and add
it to your project in 2 days, you are ok. If you were worried, you could line-
item it out and charge tax on just that work.

~~~
randomdata
iPhone development, and application development in general, essentially is
near 100% interfacing with libraries though. Even if you can add a new library
to your project in two days, that work most certainly will be to tie the new
library to the existing libraries that you have been building upon from the
start (the iOS SDK, in this instance), and thus that work would theoretically
still not be exempt.

Sounds like a complicated mess.

~~~
loumf
Interfacing with iOS frameworks is exempt. It's the third-party (not you, not
the OS), pre-written software that matters.

My experience is that that is no where near 10% of the work. If it is for your
specific custom app, you should line-item the work out.

In this case, if you are audited, they said they are looking for a "good-
faith" estimate -- your source-code repository and history of checkins are a
journal of this that is much better than anyone would ever have. I would
recommend keeping the integration somewhat isolated so that it can easily be
compared to the whole.

If you are using PhoneGap or some other application framework, then as the law
is written, I think the whole thing is taxable. I think there is a good chance
that this part may be amended -- if you are in MA, please write the DOR about
this case (I already have).

Email rulesandregs@dor.state.ma.us -- just set up the situation and ask the
question -- they will use it pretty much verbatim in their FAQ.

------
coldcode
As I said before when this came up, the only thing that will cause politicians
to change the rules is money. As in abandon the state entirely so they don't
get anything. Move away, change your business, whatever it takes and then let
the politicians (and the public) know why you are giving up on them. Sure it's
painful but that's the only thing that gets the attention of the idiots in
charge.

------
JackFr
One of the extremely tough things about pension liabilities, is that they are
costs with present benefit -- they a labor costs from labor performed decades
ago. As a state, you cannot even expect that the pensions paid will be spent
in your state. Since theses are typically states or municipalities they lack
the sovereign ability to print money, and they face the problem that it is
relatively easy (versus a nation state) to leave their taxing jurisdiction.
This is especially true especially with income tax increases -- those most
impacted are also those with the greatest mobility.

That is why the Federal government's response to the Detroit bankruptcy is so
important. Are the rest of us going to be on the hook for the unfunded munis
or not?

------
rkaplan
For anyone trying to determine how they can help: make a phone call.
Politicians care about phone calls infinitely more than tweets or Change.org
signatures. If enough people call the DoR (617-887-MDOR) and their MA
representative with complaints, it's very possible that something could
change.

------
velodrome
It's a great way to drive that particular business out of the state.

If they apply this tax towards STEM education, then the benefit might be worth
it.

~~~
MetaCosm
You understand that if it drives the business out of state, there is no
benefit, no upside. There is no money to go towards STEM, and if the states
general economy goes down over it -- it is a net-negative on STEM.

~~~
tomjen3
Bull there will be a huge benefit - the lost business will no longer have to
suffer under the idiocities of the Mass. government.

------
jpmattia
> [Mass. DOR FAQ] _It doesn’t matter where you host the information. If the
> business you’re working for has offices in Massachusetts, you have to
> collect tax._

Sounds like the solution is pretty obvious. And I doubt anyone will miss
Boston winters.

------
psi_rockin
Although it's certainly obnoxious and poorly thought out, in the long run we
development shops will get all the edge cases figured out, though dealing with
the legislature is going to be like pulling teeth. Although it would increase
startup costs and decrease ROI for us, let's not forget who actually pays this
tax: our clients, the buyers of these services. If you are a Massachusetts
company and you buy technical services, you now have a really strong incentive
to head north to New Hampshire or south to Rhode Island. Massachusetts is also
small enough that you might be able to pull that off without losing too many
employees.

~~~
bhickey
If you're looking to minimize your taxes, Rhode Island is a poor choice.
Property tax in Providence is $33.75 per $1000 ($19.25 for owner-occupied
property) levied on 100% of the assessed value. On top of this, the state has
a huge unfunded pension liability and municipal benefits liability (~$2.3bn).
State employees and teachers benefits add up to another $7bn.

When the other shoe drops, the money is going to come from somewhere or the
state will go bankrupt.

------
dccoolgai
This is surely one of the most irresponsible pieces of legslation nywhere this
decade.

~~~
velodrome
They should create a tax for lawyers. They are far less productive than
engineers -- all they do is argue all day and not create anything of value.

~~~
DannyBee
Uh, you have a strange view of 1\. what the average engineer does all day 2\.
What the average lawyer does all day

Most lawyers spend time working on client's problems, not "argue all day".

Lawyers bill their time often in 5 minute increments, and only charge for time
they are actually doing something.

If the average engineer sat down and tracked what they did every 5 minutes of
the day, i think you'd find they are a lot less productive than they think.

~~~
velodrome
In California, lawyers bill hourly and in the $300-400/hr range.

But your right, we should look to Congress because they are actually quite
productive. Majority of them have a background in political science and law.

[http://www.fas.org/sgp/crs/misc/R42365.pdf](http://www.fas.org/sgp/crs/misc/R42365.pdf)

[http://www.senate.gov/CRSReports/crs-
publish.cfm?pid=%260BL%...](http://www.senate.gov/CRSReports/crs-
publish.cfm?pid=%260BL%2BR%5CC%3F%0A)

~~~
DannyBee
All lawyers have an hourly rate, the question is the minimum time unit they
charge for.

I'm not sure what congress has to do with any of this.

I could point out engineers doing plenty of evil unproductive and wasteful
things too (malware, fart apps, NSA surveillance applications, whatever), but
much like your original complaint, it's just character assassination

~~~
velodrome
It is clear your a lawyer of some kind. I am not trying to demean your
profession or others who practice law. I was using role reversal to make a
point. I should have used "legislator" instead. So, I apologize for that.

The decision-makers are mostly comprised of people with a background in law.
Why is it fair to pass a law for taxing software development but not taxing
the act of practicing law?

I just think it is unfair for legislators to protect their professional
occupation at the expense of others. There clearly needs to be more diversity
among people who hold public office.

As for unproductive engineers - sure, there are plenty. The same applies to
all other professions. However, it is hard to argue against the progress made
by STEM fields over the last few centuries.

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nighthawk24
This is definitely going to backfire. Stuff will be outsourced. The state
should provide incentives to the best of IT crowd.

------
Vivtek
I like this translation of the FAQ into plumbing and carpentry services as an
analogy that makes things easier to understand for non-software people
(especially the one about RV plumbing that makes it clear that the buyer is
liable for use tax for all use of the RV's plumbing within Massachusetts).

[http://repealtheitservicetax.com/2013/08/02/plumbing-and-
car...](http://repealtheitservicetax.com/2013/08/02/plumbing-and-carpentry-
service-tax-parody/)

------
6d0debc071
I wonder whether you can just 'give away' the free upgrades and the like and
charge a standard consulting fee with the operation that folds the price into
it.

------
yahelc
Is there a reason this article doesn't mention what the actual tax rate is?
According to other articles, it's 6.25%, but that omission from this article
seems glaring.

Is it because that number is perceived as low, and mentioning it undermines
the argument of how dire opponents think it is?

(Genuinely asking, not trolling; my employer is almost certainly going to be
hit by this tax.)

~~~
mjn
I think it's not mentioned because it's not a separate tax with its own rate,
but a change in what categories of transactions sales tax applies to.
Therefore the rate is just the regular sales-tax rate. The controversy is over
what should be covered by sales tax more than the rate.

------
thwest
Another reason to license software not sell it.

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chiph
What a mess. At this point I'm not inclined to sell to anyone in the state.

~~~
dsr_
It only applies to you, the seller, if you are located or have an office in
Massachusetts.

~~~
acomar
> Anyone working in the IT industry who sells software or related services to
> any business that has any office in Massachusetts.

So no, it applies if your client is located in the state.

~~~
mjn
It doesn't (and can't, unless Congress changes the law) override the basic
requirement that Massachusetts can only require you to collect sales tax if
you have a Massachusetts nexus establishing jurisdiction. However if you are
1099 consulting for an MA client, in many cases that will establish an MA
nexus, so this will apply to many consultants who have MA clients. On the
other hand if you purely operate a website where people can purchase software
or hosted services with a credit-card, and you have no MA presence, merely
having customers from MA won't establish an MA nexus.

~~~
yourapostasy
What if you are a SquareUp.com and you send hardware to your customers that
enables the out-of-state hosted service? Even if the hardware was free to the
customer, as I read the new law in the context of real property that
establishes nexus, simply having hardware in the state establishes nexus.

~~~
dragonwriter
Square readers are tangible personal property, not real property; and they are
tangible personal property o the customer once they are sent out, not of
SquareUp. So, they have zero relevance to a rule that would make real property
owned by SquareUp a nexus in the state, as they are neither real property nor
owned by SquareUp.

~~~
yourapostasy
Good point, that was a poor example I chose. This tax will hit service-
delivered-as-an-appliance plays out there, if I am reading it right. Unless
they give away the appliance server.

------
magoon
Boston's own implementation of the Tea Act, only 240 years later...

------
mkramlich
I'm trying an extreme version of "skate where the puck is headed, not where
it's at" with respect to taxes. In my free time I've started designing a tax
system which has the potential to be radically simpler, more fair and
automated than the current kinds of systems in place. It's fairly obvious than
the existing systems are overly complex, unfair, burdensome compliance-wise,
confusing and rife for abuse.

