In case you missed the recently effective sales tax in Massachusetts on certain computer services, its over. Effective September 30, 2013, recent legislation, St. 2013, c. 95, retroactively repeals recently effected imposition of the Massachusetts sales and use tax to certain services relating to computer system design and to modification, integration, enhancement, installation, or configuration of standardized or prewritten software. Those changes were effective July 31, 2013 and have now been repealed retroactively to that date. Vendors that have collected and remitted the sales tax can go to the Massachusetts Department of Revenue website (http://www.mass.gov/dor) for instructions on amending their returns and seeking refunds of the sales taxes remitted for the periods July and August.
This action in Massachusetts follows a long line of state efforts to enact sales tax legislation expanding the state sales tax to cover computer services, only to subsequently repeal this legislation shortly thereafter. New Jersey, Florida and Maryland have also previously enacting a sales tax on computer services, only to repeal the tax within a few months, typically in response to organized lobbying efforts by technology-centric industry groups. In New Jersey and Florida, the state revenue authorities supported the repeals, noting that administration of the sales tax on computer services was too cumbersome relative to the revenue gains. One difficulty is sourcing the sales of services in a multistate and mobile client environment. Another is the lack of clarity regarding the scope of taxable services, i.e., defining computer services, as many industries - such as legal, accounting, banking – provide potentially taxable computer services incidentally in the provision of their core services