Denver's tax on web and app development draws ire from software execs
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Re: Denver's tax on web and app development draws ire from software execs
#2Does 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.
Re: Denver's tax on web and app development draws ire from software execs
#3> "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"...
Re: Denver's tax on web and app development draws ire from software execs
#4> "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…
This is technically true for MOST taxes in the USA. Generally municipalities have reciprocal agreements with each other, but when tax is fixed at a state or municipality level, you generally are supposed to file proof of tax payment in the location of purchase, and that is then generally applied as a credit against any tax burden imposed on the place of use. A perfect example is income tax in the US if you work in one state, but reside in another.
It's inefficient, but how else would a local tax scheme be at all enforceable?
Re: Denver's tax on web and app development draws ire from software execs
#5> "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…
USA is a big country, and sales tax is not federally administered.
This isn't an import tax, this is an anti-evasion provision so some city elsewhere can't unilaterally undermine this city's tax policy.
The USA recognizes state law as a defends against Federal tyranny.
Re: Denver's tax on web and app development draws ire from software execs
#6> "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…
No, it isn't a joke. 'Sales tax' which is not quite like VAT but close, is a bundle of taxes with components from a variety of interests, in the Bay Area for example there are bits for infrastructure improvement, Metro and public transportation fees, county initiatives, and city initiatives. It is charged based on where the item was bought.
There is a companion tax called 'use tax' which mirrors the components of sales tax but it specific to the place where something is used. The 'problem' that use tax was created to solve was that people would go to the city or state next door and buy things at one tax rate, for use in an area where they were also available but at a (generally) higher tax rate. Use tax laws give cities and states the power to collect the difference in taxes from the user.
It is nearly impossible to enforce, but it is a useful 'kicker' in an audit of an entity that keeps good records.
Re: Denver's tax on web and app development draws ire from software execs
#7> "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…
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.
Re: Denver's tax on web and app development draws ire from software execs
#8> "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…
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Re: Denver's tax on web and app development draws ire from software execs
#9Quick 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.
Re: Denver's tax on web and app development draws ire from software execs
#10As 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?