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Massachusetts’ New Computer Tax Is Confusing

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A lot of people who are involved in the sale of computer software services have been spending the past couple of echoing the that Vinny Barbarino made famous on Welcome Back Kotter, “I’m so confused.”   That’s because the state’s new 6.25 present sales tax on certain computer and software services that took effect on Wednesday is not clear on exactly what is supposed to be taxed.

According to the Massachusetts revenue department, the new tax applies to “certain services relating to computer system design and to modification, integration, enhancement, installation, or configuration of standardized or prewritten software.”  Say what?   The department says it’s getting a lot of questions about what that all means and expect to provide “further guidance” in the future after taking public comment and meeting with affected industries.  Lawmakers have said they expect the new tax to generate $161 million in new revenue.

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