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The Response to Massachusetts Software Services Tax


 Massachusetts: the computer services tax storm has arrived.

Massachusetts has been taxing sales of software services for all of two weeks, and already a measure has been introduced to repeal the tax. The irony? The lawmaker who filed the bill voted in favor of the very law that imposed the tax.

New Information

Senator Karen Spilka (D) would now like to "find alternatives to raising the $160 million that the software tax is intended to yield annually." Why? "I've heard from a lot of tech businesses and a lot of people--more than I think we normally hear from. There's a lot of information that has come to light about the tech tax and the potential impact. … It's the opposite message we want to send the tech industry." (Boston Herald).

According to the senator, her past support of the An Act Relative to Transportation Finance was based on her knowledge at that time. She knows more now. She isn't simply changing her stance because she is now running for Congress.

Undercutting the future of Massachusetts

Yet from the very beginning, expanding the state's 6.25% sales tax to include many computer services was controversial. Back in June, the Massachusetts Taxpayers Foundation issued a statement on the tax, calling it "the most sweeping computer and software services tax in the nation." The legislation "strikes at the heart of the Massachusetts economy and will stifle job creation for years to come." While several other states tax computer services, Massachusetts' rate of taxation is the highest.

Writing to the Massachusetts Revenue Commissioner in response to "an outcry from some lawmakers and businesspeople who objected to the computer services tax," state House and Senate leaders Rep. Brian Dempsey and Sen. Stephen Brewer assured, "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."

It seems the chance for revisitation has arrived. Senator Spilka is not the only one who wants to repeal the tax; more than 1,600 people have given their signatures to a petition seeking to repeal the tax in the November election.

Read more about An Act Relative to Transportation Finance.

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photo credit: Raymond Larose via photopin cc


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.