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The Massachusetts Software Tax

fastcolabs.com

181–190 of 201 posts

Re: The Massachusetts Software Tax

#181
post #26

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 s…

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?

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.

Re: The Massachusetts Software Tax

#182

Earlier quoted context omitted.

"police protection" I've had the misfortune of having to deal with the police of two different police departments this year. In the first instance my car was stolen, in the second someone ran into my car that was parked on the side of the road. In both instances the Police were totally incompetent and arguably caused me more financial damage than the criminal and the out of control driver. Here is how; Once the Polic…

So you'd rather pay some company the hourly to locate you car because they throw a tow in for "free"?

I'd rather they just left it where it was found and let me know where it was so I could go get it. The car was only worth a couple grand to begin with so paying 400 bucks to bail it out of car jail was not something I wanted to do and on top of it they said if I decided it wasn't worth it they would sell it and come after me for the 400+ bucks anyways. Had I realized the police were so predatory I would have just installed a GPS tracker on it so in the event it was stolen I could recover it myself.

Re: The Massachusetts Software Tax

#183
post #59

Earlier quoted context omitted.

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.

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

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.

Re: The Massachusetts Software Tax

#184
post #177

Earlier quoted context omitted.

I'm sure glad I don't get all the police I pay for.

If you're dissatisfied with the level of service you get from the police, imagine how things would look if there were no courts, no prison system, no laws and no police.

You must understand, that the absence of a state is not equal to the absence of those organizations. The state simply taught you that only it can build and operate them. But the truth is, the demand for those things doesn't vanish with the absence of a state.

Re: The Massachusetts Software Tax

#185
post #62

Earlier quoted context omitted.

That's sort of how I feel about U.S. taxes in general. I paid somewhat lower taxes in the U.S. than Denmark, but it felt like I got a ton less service. Despite paying taxes, there was no public healthcare, even public university charged thousands of dollars in tuition, transit wasn't great, unemployment insurance was relatively poor, public services like libraries were overcrowded, housing assistance had a 10-year wa…

Have you seen that d3 visualization of the US federal budget? It's pretty interesting. Social security, Defense, and Medicare make up the lion's share of spending. you probably don't use these (except defense, arguably indirectly, but I suspect your politics would disagree with the budget size)

He's probably using social security and medicare more than defense. The chance that he gets sick or unemployed is probably a lot larger than the chance that the US gets attacked or significantly threatened.

Knowing that you're covered in case anything goes wrong is enough to make the taxes worth it.

Re: The Massachusetts Software Tax

#186
post #96

Earlier quoted context omitted.

OK, you're trolling here, and if I could downvote you for it, I would; but since I can't, let me try to raise the level of discussion: > I would prefer to pay for services I use I invite you, sometime, to think about which services you really use, and try to figure out how much it would cost to purchase each of them if you were doing so on your own. Don't forget: police protection, fire protection, military protectio…

>I invite you, sometime, to think about which services you really use, and try to figure out how much it would cost to purchase each of them if you were doing so on your own. Don't forget: police protection, fire protection, military protection, paved roads, functioning traffic signals and signs, groomed parks, trash collection (some places), up to sixteen years of education, enforcement of workplace safety standards…

> First of all the comment he was replying to was talking about services like housing, transportation, and healthcare, which already are provided by the market and aren't really things the government has any advantage in. As for all the stuff it does pay for, at best it costs exactly the same amount as you have to pay in taxes. But the government spends money on a lot of other things with your taxes that don't really benefit you. So you would save a decent amount of money. And with no competition, the services they do provide cost a lot more then they probably could.

Healthcare is one area where a collective (i.e. by the government) approach has a definite advantage. Privatized health care and health insurance is a lot more expensive. The US has the highest medical costs in the western world, yet many people are lacking very basic medical care.

The second most expensive country (at roughly half the cost per capita) is Netherland, where health care is semi-private, semi-government, and health insurance is private but regulated and compulsory in order to provide a uniform standard for everybody. And surrounding countries (where it's cheaper) have better health care at least in some areas.

I don't have numbers, but I expect that the cheapest and highest quality medical care in the western world will be in some country where health care is strongly dominated by the government.

> Everyone pays their taxes to avoid having their property stolen or going to jail. The fact that force isn't applied unreasonably doesn't mean it isn't there.

Just like everybody doesn't steal from their neighbour or kill people who anger them in order to avoid going to jail. That doesn't mean there's anything wrong with taxes; it means we live in a civilized society with some basic standards of behaviour.

> There are people that don't consent. At best you could say the majority consent. You can justify it by saying it's better than any other system we know of, but not that people consent to it.

The same goes for any law. I'm sure there are people that disagree that theft or murder should be illegal. Or slavery, for that matter. And those are the extreme cases. For every law, there are some who don't agree with it. Should every law only apply to those who agree with it? Laws would lose their meaning.

Re: The Massachusetts Software Tax

#187
post #31
post #24

Earlier quoted context omitted.

> 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.

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 w…

Until someone challenges the law (and wins in court), then MA will certainly attempt to collect the money.

Re: The Massachusetts Software Tax

#188

Earlier quoted context omitted.

> First of all the comment he was replying to was talking about services like housing, transportation, and healthcare, which already are provided by the market and aren't really things the government has any advantage in. As for all the stuff it does pay for, at best it costs exactly the same amount as you have to pay in taxes. But the government spends money on a lot of other things with your taxes that don't really…

There is multiple reasons for this, and none of them support the conclusion that "government-run" healthcare is better. The Current US System is the Worst possible system a culmination of decades of government interference in both employment laws which is irrevocably linked health "insurance" with employment and turned "insurance" into a services prepayment pozi scheme. Government run systems control costs by having…

Can you name a country that has the system you want, and has it work better and cheaper than most of the western world?

The US is the example of the most privatized health care, and it's almost twice as expensive as the #2 most expensive country. That #2 country has a semi-privatized system.

Re: The Massachusetts Software Tax

#189
post #67

Earlier quoted context omitted.

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 n…

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…

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.

Re: The Massachusetts Software Tax

#190

Earlier quoted context omitted.

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 l…

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.senate.gov/CRSReports/crs-publish.cfm?pid=%260BL%...

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

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