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State of Massachusetts may impose a tax on website design and other services

The governor of the state of Massachusetts has proposed a new tax within the state that could apply to cloud-based services. If the Massachusetts state legislature approved the governor's plan, the state tax on "canned software" would be expanded covering some elements of cloud computing.
The proposal is for a tax of 4.5%, which is lower than the state 6.25% sales tax. The tax plan does call for an exemption for people that store music or digital books on the cloud. According to members of Governor Deval Patrick's administration, the tax would bring in an estimated $265 million during 2014.
"We need our tax code to catch up with the way that technology is affecting everyone in their daily lives," said David Sullivan, legal counsel for the Executive Office for Administration and Finance in WBUR's story.
The tax expansion would cover custom-designed software and some services that run in the cloud. The custom software design services would include things such as website designs, Java software, PHP coding, and other custom software coding. The tax expansion would also apply the 4.5% tax to the cost of hosting a website and bandwidth needed to operate the website.
Some of the details on the service are still unknown. However, if the tax applies to hosting, bandwidth, storage, security, and other services it would potentially be applied to anything a company uses is not hosted on the premises. 

Source: Network Computing

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By bill.rookard on 3/26/2013 10:19:55 AM , Rating: 2
How do you apply a tax with a service that by definition is 'cloud based'.

Are you going to tax a company that exists in another state that -provides- services to your state? Good luck. Without a physical presence in the state how do you tax them?

Going to tax companies that are strictly -in- state? The flexible nature of cloud based providers -by definition- makes it very easy to relocate out of state while still providing services.

I'm not really sure if they've thought this whole thing through.

By Ammohunt on 3/26/2013 11:29:35 AM , Rating: 2
That was my question they have no way now to track say internet purchases from out of state seems to me that this would fall in that category. The whole point of the cloud is to distribute your applications/data away from a single location. All this does is cause companies to develop solutions outside of Massachusetts and make it harder for developers to find work in Massachusetts. Another dumbass unenforceable law from dumbass leftist politicians.

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