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Sales Tax on Computer Services

July 31, 2013 By dan-p

I post and comment here quite infrequently but do enjoy reading what others have to say. I’m driven to post today because I am so very disappointed with the Massachusetts legislature and the half-assed way in which they’ve expanded the sales tax to include “computer system design services”. I am a lawyer in the technology sector and we have spent the past week trying to figure out what that means. So far, the Department of Revenue’s “guidance” has been to rephrase the law without actually providing any meaning. I suspect there are some tech people out there who are affected by this law and don’t even know it. The most frustrating part is that the law was passed on July 24 and became effective today! So know we in the tech sector have to figure out if the law applies to our services and whether we have to collect the tax or ask our customers (in the case of multi-state clients) to apportion the use tax among the states in which the “computer system design services” will be used.

I’ve written my legislators asking them to revisit this law to at least push the effective date out a few months, but other than that, and complaining here, I don’t know what else to do. I am not fundamentally opposed to the law (although sales taxes are a cop-out for real tax reform) but can’t believe how recklessly the legislature is passing a law that affects a $25 billion sector of the Massachusetts economy.

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