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(EMAILWIRE.COM, April 19, 2013 ) London, UK -- The WBUR is now reporting that a new proposal to tax cloud computing services, as part of a Massachusetts plan to boost stat spending $1.9 billion, has been offered by Governor Deval Patrick.
The plan includes $265 million line item within the the budget that, if accepted, will see sales taxes expanded to include the currently-phased “canned software”.
The tax would cover custom-designed software and services that are hosted on the Internet (aka The Cloud). “Custom software includes the design and custom development of Web sites, so the overall cost to local businesses of the new website could increase by somewhere around 4.5%
Recently, the United States Senate supported a non-binding vote to approve a law that will allow states to collect taxes from internet retail. If enacted, it would allow all states to levy taxes on some online retail item/service purchases from businesses with over $1 million in total gross receipts.
The Massachusetts proposal differs from that of other tax proposals that involve the internet as with the broad terminology, the web hosting of a yoga studio's custom website could be within the taxable realm.
“It would also tax backing up data on the cloud, but not music and e-books. The largest portion of the new tax would be collected from specialized business software services –a fast-growing part of the state and national economies.”
“I think the best way to say it is 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 Massachusetts. “Our tax agency is no different from the rest of the world. We’re not living in the 19th century any more, we have modern products that have modern needs, and we have to accommodate to those needs.”
A recent article outlined some of the possible problems with the taxing cloud services, noting “[the] taxing cloud-based services poses problems for both the state and the company being taxed, according to a 2012 report from KPMG International. Because many cloud services are available in more than one state, or have physical facilities in more than one state, questions about which state has jurisdiction and what tax might apply become complicated very quickly, according to KPMG. ”
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Source: EmailWire.com
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