Hi all. My name is Rich and I do independent website development in Madison, with some usage of Drupal. Some reliable sources have clued me in that the upcoming implementation of the streamlined sales tax -- which primarily taxes internet sales from out of state -- also includes terms that would make it necessary for me and other developers creating customized software to charge our customers sales tax.
I only started my business in early 2008 so I haven't paid taxes yet, but it has been my understanding that according to the rules referenced in this article: http://www.wislawjournal.com/article.cfm/2008/07/21/Ruling-defines-tax-status-of-modified-software, sales tax is not required for "customized software", which would include the websites I create for my small business clients.
If anybody has any insight into these matters, or any idea how to avert the impending decision by the state legislature, feel free to join in.
Cheers,
Rich
http://www.richjoiner.com
Comments
Yes
The proposals to implement the tax changes include a proposal to drop the current exemption for customized software, because the state took a pretty bad bath on this due to the Supreme Court ruling last summer for Menasha Corporation. The streamlined tax bill has been coming and going for the past 6 years in Wisconsin, but it appears possible that it may pass this year due to the Democratic majority. The story there has always been a little complex and bewildering - for example, your web site development suddenly becomes taxable if you send a CD or tape of the web site to your customer - it's now been delivered as a finished piece of art. Go figure. This hasn't ever affecte me a whole lot since I do very little work for people in-state. It does make for a complicated set of rules for developers in the state. You should read the appropriate documents on the Dept of Revenue web site so you'll understand what is and isn't taxable.
You can certainly make your opinions about this known to your legislators - but the main effect this would have would be that you'd have to collect the sales tax from in-state customers and pay it to the DOR.
Steve Hanson
Cruiskeen Consulting LLC - http://www.cruiskeenconsulting.com
Steve Hanson
Cruiskeen Consulting LLC - http://www.cruiskeenconsulting.com
Damned Democrats!
What is the current legislative source text? What counts as "software" and "modification"? I doubt the State has any idea, so there may be a lot of wiggle room.
Dan Knauss
LinkedIn: www.linkedin.com/in/danknauss
New Local Media :: Riverwest Neighborhood Network
www.newlocalmedia.com :: www.riverwestneighborhood.org
Dan Knauss
LinkedIn: www.linkedin.com/in/danknauss
New Local Media :: www.newlocalmedia.com