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The Massachusetts Software Tax

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Re: The Massachusetts Software Tax

#81

Post by rayiner »

thecodeore wrote: post #73
mjn wrote: 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…

I would prefer to pay for services I use then to have the money stolen from me by force while people pretend it is moral because it is called "taxes"

Taxes are what you pay to transform the act of killing and eating you into "murder" from what it really is: natural selection.

Re: The Massachusetts Software Tax

#82

Post by mikemac »

loumf wrote: post #68
patio11 wrote: post #34

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 consti…

It is an open secret that compliance in the US with use taxes is nearly zero. Yes, but at least in MA, they pay when they get audited. Small companies may not be complying without audits, but anyone big enough to use invoice processing software is probably complying -- or at least, is actively ignoring prompts from their software to comply -- which controller/accountants/CPAs don't usually like to do.

Paying a use tax is often overlooked, especially when a significant amount of hardware purchases are made through Amazon which does not charge sales tax in MA (yet). If you are a controller, it is relatively easy to keep track of these purchases throughout the quarter and pay 4 times per year.

You should generally file some amount each quarter (even zero), if only to keep the MA DOR off your back.

Re: The Massachusetts Software Tax

#83

Post by [deleted] »

kmfrk wrote: post #38
cinquemb wrote: post #32

Earlier quoted context omitted.

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 dat…

Chicago is also boned in the future: http://mobile.nytimes.com/2013/08/06/us/chicago-sees-pension... . EDIT: Alternatively http://www.suntimes.com/news/cityhall/21642911-418/city-defi... . Keep in mind that Detroit had loaned money from other states that aren't likely to get it back.

[deleted]

Re: The Massachusetts Software Tax

#84

Post by Dylan16807 »

yourapostasy wrote: post #50
mjn wrote: post #31

Earlier quoted context omitted.

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…

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.

'real' means land* And improvements to land, like buildings. I'm curious if you thought it was an extraneous word, or what you thought the alternative to 'real' property would be.

*except in Louisiana, where they use French terminology for everything and you have immovable/movable property rather than real/personal

Re: The Massachusetts Software Tax

#85

Post by [deleted] »

brokenmusic wrote: post #10

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.

[deleted]

Re: The Massachusetts Software Tax

#86

Post by will_work4tears »

mjn wrote: post #39
patio11 wrote: post #34

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 consti…

> 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 clie…

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.

Re: The Massachusetts Software Tax

#87

Post by 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?

Re: The Massachusetts Software Tax

#88

Post by TomaszZielinski »

tehwalrus wrote: post #56
keithpeter wrote: post #53

Earlier quoted context omitted.

http://www.hmrc.gov.uk/vat/index.htm?_nfpb=true&_pageLabel=p... Not quite easy but if your business turns over more than £79k then you will have registered for VAT in the UK. A US state VAT system would, presumably, result in a matrix multiplier (52 by 52 or whatever the number of different rates are) and require companies to track transactions in the various states.

State of seller determines the tax rate. In the EU, if you're British and buying from Germany, you pay German, not British, VAT rates - they should copy that. Agreed though, that British VAT isn't as simple as it could be (whole categories exempt, etc.)

Not quite true.

The rule of thumb is that VAT is a tax on consumers, not businesses. Of course there are hundreds of exceptions to that.

If you are a British company buying services from Germany then the seller shouldn't charge you a penny, then you charge the British VAT on the purchase and then deduct it if only the purchase is related to _your_ taxable sale(s).

But if you are a British consumer then the seller should charge you the German VAT.

That's the general case, there are exceptions to that and exceptions to exceptions so don't bite me please :)

By the way, the national VAT bills have to be complex simply because they are meant to mirror the EU directive: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:...

Re: The Massachusetts Software Tax

#89

Post by metaphorm »

skrebbel wrote: post #9

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.

sales tax, not import tax. the tax is implied internally as well, not only to transactions from foreign businesses.

Re: The Massachusetts Software Tax

#90

Post by stan_rogers »

jt2190 wrote: post #46
tehwalrus wrote: post #25

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…

Agree. I lived in Toronto when the Canadian Government introduced the Goods and Services Tax (GST) as a replacement for the old Manufacturer's Sales Tax (MST) of 13% on all products manufactured in the country, as this hurt the international competitiveness of manufacturers. The proposal was to replace all provincial sales taxes with the GST, and to apply GST to everything, to keep it super-simple to implement. Well…

The MST wasn't just on products manufactured in the country and didn't have much to do with either international or domestic competitiveness; moving to the GST merely lowered taxes on luxury goods at the expense of raising them on what would be considered necessaries in contract law. By waiting a month to buy the (all foreign-made components) stereo God would have had if he could afford it (I had the audiophile bug bad back then) until the system transitioned, I saved over $5000. Meanwhile, folks buying cheap, basic clothing, cleaning supplies, toilet paper and low-end fast food (all of which were exempt from the MST) were making up the difference.
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