Solution Providers Fight Back Against Massachusetts Software Services Tax

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In a letter to the Department of Revenue, the co-authors of the law, Senator Stephen Brewer and Representative Brian Dempsey, asked the department to narrowly interpret the laws and stated that if the law extended beyond their intentions, they would modify the guidelines to more closely fit the $161 million goal.

"Should the revenue or job impacts be greater than anticipated, or if the tax is imposed on vendors not intended we will not hesitate to revisit these changes. We will remain vigilant as these changes to the sales tax are implemented to ensure that they have the impact we anticipate," the letter said.

Despite the fact that the legislature has already rolled back some of the wider-sweeping measures of the tax, there was no public hearing on the issue ahead of time, according to Massachusetts Taxpayers Foundation's Widmer, which would have given the industry a chance to respond to the issue.

"An accountant doesn't charge a sales tax on doing a tax return, but now I guess [we'll be charged] if the accountant installs software to work on your taxes," Cumulus' Falcon said. "It's definitely targeting. I think it's going to catch a lot of business out of state off guard."

In response to many requests for information, the Department of Revenue released an FAQ sheet about the tax that began to clarify the questions for which services were taxable and which were not. In the meantime, Falcon said that his company has no choice but to absorb the costs and wait and see what happens.

"In the meantime we're screwed," Falcon said. "There's no better way to put it."


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