Mass Legislators Leaving Crumbling IT services sales and use tax
According to a panel of experts that convened in Northampton, MA last night; the word on Beacon Hill is that the poorly planned and hastily implemented Technology Service Tax is causing most of the bills initial supporters to quickly change their political position to disassociate themselves with the "mess" that is being created.
Also, the Department of Revenue is pushing back on legislators to repeal the tax because they were not given enough time to implement their systems to amend regulations to enforce the tax. Already, the due dates for initial collection have been pushed back one month to September 30, 2013.
There is so much confusion about the definitions of service because of the way that the legislation was written (by non-geeks who do not understand what geeks do).
Here is a good analogy that compares building a house with building a website and demonstrates why the tax on the service of building websites does not make sense: If you buy a hammer (out of the box website creation software) at home depot (staples) and build a house (website) that hammer, than the whole house would be subject to the tax and you (the developer) would have to collect that tax. However, if you were to find a hammer on the street (open source website creation software) and build the house with that hammer instead, than the house/website is exempt from the tax.
Furthermore, the law requires that the tax be collected on all invoiced services rather than services that have been paid for, so essentially Massachusetts small businesses are going to have to pay even if they have not been paid for that invoice. They will then have to try and recoup that money from the DOR if they change that invoice or don't get paid for that invoice.
Take if from your Northampton, MA CPA; this tax is a VMO (Very Messy Ordeal) and sets a nasty precedent for more taxes on other services in Massachusetts that we all depend on. Imagine adding 6% to all of your services like your hair stylist, plumber, painter, landscaper, etc.!
What can you do to help? Go to www.beaconhillblitz.com to call your local reps and let them know that you do not support this tax. Another resource that is actively tweeting is is sparkcoalition.org.