If you are like most of us, sometimes with all of the political noise coming out of Washington and our own statehouse in Massachusetts, it is hard to follow just what is going on. I think our lawmakers have finally caught up to this weakness and the result is they are about to pass a series of tax bills which will have a major affect both on our businesses and our consumers.
Senate Passes MFA
This week the Senate in Washington passed a bill called the Marketplace Fairness Act of 2013 (MFA). Like most bills coming out of Washington, the devil is in the detail, but basically this bill, when signed by the President will give each state the ability to opt in and require that businesses collect and remit sales taxes for items they sell in states where they are not registered. Most of us think of this as internet sales, but clearly it is any sales that are made to any state regardless of whether or not you have a physical presence. Exempted from the requirement are those companies whose remote sales in the aggregate are less than $1 Million. The details on this are still a bit sketchy, but this will mean that if you are registered in one state and you do business in many, you will have to determine your eligibility by tracking your remote sales and if you find they exceed $1 Million, you will have to register, report and remit in all of those remote states. There are over 11,000 taxing districts across the US so for those with an online presence this could be quite a challenge and quite a cost. The vote passed the Senate with overwhelming bipartisan support 69-27, so chances it will not get signed into law are minimal. We must all clearly be ready and prepared to take on this new burden and cost. At GraVoc, we will begin to look at how this impacts our customers and advise you accordingly, but it would be prudent to get familiar with what is going on with this act as it may have a major impact on you and your business.
Governor Patrick’s 2014 Budget – Let’s Tax Computer and Data Processing Services
Slicker than any stealth bomber ever built, new taxes impacting both consumers and businesses are also flying through our state legislature. In roughly 3 days the Massachusetts House of Representatives passed a budget onto the Senate and the senate is now working on the budget which contains a number of new taxes that have had literally no opposition. One such tax is to now include “Computer and Data Processing Services” as amended in definition in the tax code as eligible for sales tax. Summing this up literally anything pertaining to software and software implementation including, web and hosting services, cloud or non-cloud will be eligible for sales tax when this is signed into law. Given the late stage this process is in, we think this is also inevitable and will soon be passed. The costs again to consumers and to businesses that provide this type of support and services are significant. We will need to be prepared to address this among our many customers who provide services as well. We will keep you posted on this as it winds its way through the process. In the interim, it cannot hurt for everyone to contact their local representatives and express your dissatisfaction.