What a mess... So if I buy a SaaS product that requires some config on the providers end, is that taxable too?
Taxachusetts
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Massachusetts Introduces Software Service Tax
31–40 of 85 posts
Re: Massachusetts Introduces Software Service Tax
#32What a mess... So if I buy a SaaS product that requires some config on the providers end, is that taxable too?
As of a few months ago, MA actually charges tax on SaaS sold to customers in MA - that's been pretty clear. (I got notices from a few of my SaaS providers and everything).
Really? Do you have a reference for that?
Re: Massachusetts Introduces Software Service Tax
#33According to a friend of mine who is relatively knowledgeable about this law, it was originally intended to target enterprise companies that were essentially selling software for next to nothing and then charging like mad for the "installation and configuration" to avoid sales tax. The wisdom of even that approach is debatable, but the actual language of the law is far from conveying that intent and is a total, indec…
>intended to target enterprise companies that were essentially selling software for next to nothing and then charging like mad for the "installation and configuration" to avoid sales tax.
Such is what happens you impose high tax rates: people relabel transactions so they fall outside the tax. The. You have to issue new rules that try to make the relabeling not work. Then, the regulation books start to explode in length to cover the all the blooming techniques, and with it, he regulatory agencies...
And then the process starts over.
Re: Massachusetts Introduces Software Service Tax
#34Is a plumber in Massachusetts required to charge tax on all services rendered, or only those that involve pre-made physical parts? Is there a paralogous example from a different profession that we can use to gain insight into this new law?
No plumbers don't charge sales tax on services; neither do doctors, lawyers, dentists, or landscapers. Sensible states tax things they want to discourage like gasoline use or smoking. They don't tax people trying work more.
That line caught me off guard. In New Jersey they do charge sales tax. All contractors (plumbers, remodelers, electricians)are required to charge and file sales tax on services that are done as maintenance.
There is something called "exempt capital improvements" and they do not get taxed. Basically, new kitchen remodel doesn't get taxed, but fixing a broken faucet does. Repair a cracked bathtub? Taxed. Rip it out and remodel the bathroom? No tax.
Re: Massachusetts Introduces Software Service Tax
#35This has disturbing implications for the rest of the country. What happens if the developers of Massachusetts just roll over and give the state hundreds of millions of dollars of extra revenue? What message does that send to other states?
I have no doubt that this will spread. I'm almost surprised that it hasn't taken off before now. But as for the people of Mass., they won't be rolling over and "giving". It is money that will be taken. That's one of the big differences between a tax, and government "revenue", and the way a business makes its money.
Re: Massachusetts Introduces Software Service Tax
#36Move. Now. The more people leave the state and/or refuse to provide services to people there the less money they get. Sure it's not a easy thing to do at all but the only way politicians get a message if it there is a high price attached.
Re: Massachusetts Introduces Software Service Tax
#37Why do all the American states have different taxes?
Here in Australia we have 10% GST (Goods and services tax). So wherever you're from in the country you can expect both goods and services to be priced the same. So much simpler for the average consumer!
Re: Massachusetts Introduces Software Service Tax
#38According to a friend of mine who is relatively knowledgeable about this law, it was originally intended to target enterprise companies that were essentially selling software for next to nothing and then charging like mad for the "installation and configuration" to avoid sales tax. The wisdom of even that approach is debatable, but the actual language of the law is far from conveying that intent and is a total, indec…
>intended to target enterprise companies that were essentially selling software for next to nothing and then charging like mad for the "installation and configuration" to avoid sales tax. Such is what happens you impose high tax rates: people relabel transactions so they fall outside the tax. The. You have to issue new rules that try to make the relabeling not work. Then, the regulation books start to explode in leng…
This is America, where even people who pay a next-to-nothing tax rate on high incomes complain about supposedly high tax rates.
Re: Massachusetts Introduces Software Service Tax
#39Earlier quoted context omitted.
It seems ridiculous to charge only one profession for providing service, and it sounds like software people just have the worst lobbyists and the worst public image (plumbers are the iconic symbol of the "little guy" small business). Here in Ontario it's much simpler (but steeper) - the harmonized provincial/federal sales and service tax is 13% on everything. Sales, service, you don't have to give a crap. There's a s…
You guys pay 13% every time money exchanges hands? Does that include when you eat a restaurant, and if so, do you also tip the waiter?
In Australia it's 10% with no tips. Wages are considerably higher (so is cost of living however.)
Re: Massachusetts Introduces Software Service Tax
#40Earlier quoted context omitted.
What on earth about this is "reasonable?" How is this any different from other professional services? We're supposed to live in a free market society where customers have the choice to pay those "insane" fees if they want to. You're advocating that the government stick their noses into the business decisions of the private sector. It's funny that this takes place at the site of the first tax rebellion.
Professional services taxes similar to sales taxes are not unheard of, nor are gross receipts taxes that vary based on what kind of business you're in. There are as many tax systems as there are tax jurisdictions. The problem here is somebody wrote a "services tax" without the first clue what they were actually doing. It's like intending to impose a new cigarette tax, but writing it such that anything which burns mig…
There are as many tax systems as there are tax jurisdictions.
And this is one of the main problems. Not only are governments (local, state, federal) trying to find creative ways to siphon money from the private sector, but the inherent nature of software services make this impossible to manage or track.
What's wrong with allowing a company to charge $1 for their software, then $100k for customization? Yes, it's a sales tax loophole, but how would this be different from a custom electronics or plumbing supply company from charging $1 for the parts and $100k for labor?
I don't know that a gross receipts tax is the answer, or what is. MA is free to do what they want, I'm just worried that this will spill over to IL, who is much more in debt.