If you provide Drupal development services in Massachusetts, you may need to start taxing your clients. No, seriously -- this is our attempt to understand the new Massachusetts "Sales and Use Tax on Computer and Software Services" law, which was conveniently released on July 25th 2013 and went into effect on July 31st, 2013.
Seemingly out of the blue, Massachusetts has amended the recent legislation, "An Act Relative to Transportation Finance, St. 2013, c. 46" that specifies a tax on "computer system design...modification, integration, enhancement, installation, or configuration of standardized or prewritten software." A TIR was released that attemps to clarify the tax, but not really.
Here's our take on how the law affects us Drupal developers (we are by no means lawyers and you should contact yours to determine how this affects your business):
- It DOES apply to any open source software services like Drupal sourced (purchased) from Massachusetts-based vendors.
- It DOES NOT affect Drupal vendors who provide services from outside Massachusetts to clients in Massachusetts.
- It DOES NOT apply to training, design, hosting, consultation and other practices that aren't directly related to the act of customizing "prewritten" software like Drupal.
- It DOES NOT apply to sites built from "scratch" using HTML, CSS, JS, etc..
- It DOES suggest that Massachusetts couldn't think of any better ways of funding their transportation projects (Big Dig anyone?)
What's clear is that this law will upset more firms than just Redfin -- many of which are small businesses who are already overwhelmed with the challenges of running a business. Some taxes make sense and others just seem like a desperate, last-ditch effort to collect some extra cash using the hope-they-don't-notice technique. While Redfin luckily resides outside of Massachusetts, many of our awesome partners and clients do not and, at some point, we'll all be affected by this poorly-enacted ammendment.
We encourage anyone in Massachusetts or who has partners in the state to sign this petition or contact the state and let them know how this legislation will affect you and your clients. If you have any questions, this FAQ proved way more useful to us than any other publication.