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Massachusetts Computer Services Tax Flounders


 ... and no Massachusetts sales tax on computer software services ...

Numerous computer services are now subject to sales tax in Massachusetts. The tax is part of a broader Transportation Finance Bill and is expected to add approximately $160 million to the state coffer; yet since it was first proposed, the tax has encountered fierce opposition. Critics say it will cost taxpayers closer to $500 million.

It is no surprise, then, that An Act to Repeal the 2013 Sales Tax on Computer and Software Technology Services has been proposed. It seeks to "eliminate Massachusetts sales and use taxes on computer system design services …" and it just might. It's been certified by Massachusetts Attorney General Martha Coakley, meaning that she considers it to be constitutionally valid. The issue may end up on the ballot next year.

After largely listening to the voices shouting for and against the tax, Governor Deval Patrick (D) spoke in favor of repealing the software services tax on Tuesday. He said that the tax could have unintended consequences and that it's "a serious blot … on our reputation as an innovative center." The governor initially lobbied for the computer software tax, although he vetoed the Transportation Finance bill that found its way to his desk. Lawmakers overrode his veto.

The governor is already looking beyond the appeal, asking what will replace the revenue generated by the so-called tech tax.

Which of the services you provide are subject to sales tax? How does your business manage sales tax changes?

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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.