Tax what? New software tax leaves tech executives dazed and confused

Massachusetts begins broad tax on software services

–File photo

The tax on software services in Massachusetts that snuck up on many people in the tech industry goes into effect Wednesday.

The tax, passed as part of a bigger transportation bill, compels businesses around the state to collect 6.25 percent sales tax on software design services, which the Department of Revenue defined as the “modification, integration, enhancement, installation, or configuration of standardized or prewritten software.’’

That broad definition has many in the tech industry scratching their heads about just how to apply a tax that some didn’t even know about until this week.

“This sudden tax complicates my company’s existing and ongoing business arrangements, causes me to waste time working through these new factors with clients, and doesn’t have an iota of business value for me or my clients. An unwelcome distraction,’’ wrote Bill Wilder, co-owner of Development Partners Software Corp., on his blog earlier this week.


“I find it absurd that our lawmakers expect businesses to react so rapidly to something that is so fundamentally disruptive,’’ he wrote.

The Globe wrote about the tax proposal in June here and again in July reported that the tech community was largely absent on Beacon Hill to oppose passage of the tax.

But tweets and blogs in recent days show a tech community still stunned by its passage.

“Crazy: is MA requiring people to charge sales tax if they’re paid to install WordPress or integrate cloud storage?’’ Jay Neely, a Boston start-up founder, wrote on Twitter.

DockYard, a local software shop, is holding a forum on Aug. 7 to discuss how the tax passed in the first place and “how the local software industry can get involved with policy decision making in the future.’’

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