Software Taxes


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If you didn’t already know, I live in Seattle. There’s a bill that’s currently in the Washington State Legislature that, if passed, will levy a tax on all software customizations done by businesses (at least, for now, those businesses residing in the state of Washington).

You may not think this impacts you directly, but if other states (or governments in other countries) see it as a viable option, they may consider doing the same thing where you live.

Check out the legislature’s proposed HB 3191. Page 90, Part XV, Point 2, as put forth by Representatives Hunter, Conway, and Hasegawa:

In order to preserve funding for higher education, it is the legislature’s intent to use revenue generated from assessing a sales and use tax on custom software to support the state’s institutions of higher education and financial aid programs including the state need grant.

What the hell does THAT mean? Well, if you’re a business in the state of Washington, you’ll be subject to a state sales tax (currently 6.5%) on any “custom software” or customization thereof.

As Übermind points out, there are two likely scenarios:

  • Scenario 1. If [a Washington company] hires an in-state consultant or consulting company, the in-state consultant or consulting company will have to collect the sales tax and pay it to the state.
  • Scenario 2. If [a Washington company] hires an out-of-state consultant, they will have to pay use tax (paid in lieu of sales tax) on their next tax bill. Again, ANY company in Washington will suddenly have to pay at least 6.5% more for these services.

I spoke with Ken Myer, President and CEO of the WTIA, to find out more about this bill – and why it’s probably not the smartest thing for small businesses here. The Washington Technology Industry Association has been fighting hard against this change.

According to Ken, approximately 2,000 Washington companies that do custom work on software will be directly impacted by this bill if it is passed. Yes, that would include the giants such as Microsoft. However, it’s also going to hit the small startup down the street… and hit it hard.

In order for small businesses to set themselves up to charge sales tax for their services and goods, they will have to raise their prices by 8% or more, just to continue breaking even. Therefore, the tax isn’t only impacting the business owners… it also just impacted YOU, the potential consumer.

As Ken says, this is the first time that a professional service is being turned into a product (and being taxed as such). As we discussed this point, a regular user in my live chat room couldn’t help but ask how a government could possibly tax something that isn’t technically “tangible,” which is a good point. A physical disc is tangible, yes. However, the services provided by businesses who are doing custom code work are not truly something tangible. Where do we draw the line here?

Pardon me, but I thought marijuana was outlawed? How else could Representatives Hunter, Conway, and Hasegawa come up with such an asinine idea? More politics behind the bill are outlined by Todd over at TechFlash.

Why sock it to small business owners who are struggling enough in a challenging economy?

It’s getting to the point where owning a small business in the state of Washington is no longer viable. There are very few incentives for me to stay here (as an operating business entity). I love the weather, I love the people, but these f*ckwits in the House have got to go.

There’s not a state in the Union that’s truly friendly to small business owners anymore.

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TeachStreet


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I recently attended the WTIA Fast Pitch Forum & Technology Showcase. The conference featured two dozen of the hottest technology companies in Washington presenting their business in a competition for “Best In Show”. TeachStreet is an online community for people who love to learn, and was one of the three “Top Presenters”.

TeachStreet is an online community that brings learners and teachers together. It’s a place where people who love to learn can find classes that are right for them. They also offer a public forum that helps teachers, coaches and other experts share what they know. In the process, TeachStreet helps them grow their businesses with online tools used to promote classes, workshops and events. This allows the experts to focus on what they do best – teach!

The TeachStreet team is a bunch of dreamers and tech Geeks who want to encourage you to get out from behind your computer, head into the world, and learn something new! They support that goal by helping people find experts in your neighborhood who can teach you anything you might be interested in learning.

TeachStreet has extensive class coverage in several cities across the US, and they’re growing every day. Whether you want to learn to sew in Seattle, or how to dance in Denver – TeachStreet has you covered.

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Daptiv


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I recently attended the WTIA Fast Pitch Forum & Technology Showcase. The conference featured two dozen of the hottest technology companies in Washington presenting their business in a competition for “Best In Show”. Daptiv provides on-demands work management solutions that adapt to your business, so you can work how you work.

Daptiv thinks there’s a better way to work. You have things you need to do. They feel that things like managing servers, installing software and planning upgrades are things they should take care of for you. Their solution for managing projects includes a collaboration environment to make it easier to work with the tools you already know and trust.

Daptiv also allows you to easily extend the standard capabilities of their software. Their secure web environment adapts to the management needs of any department within your company, and allows for point-and-click creation of forms and reports.

When this video was published and embedded in another blog, this comment was posted (from a competitor, Serena):

Poor Jeff–he looks to have aged 10 years since the ongoing financial troubles and RIFs at Daptiv began. Very interesting that he’s still claiming the leaders quadrant for Daptiv (they were dropped from it for 2009). Also interesting is his statement that CA Clarity and HP are Daptiv’s main competition. I wouldn’t have positioned Daptiv on the same strata as these pricey platinum PPM vendors. Also, from what I’ve seen of the new Agile offering, it appears to be a nice add-on to the Daptiv PM product, but a lousy stand-alone offering, considering the robust solutions already in that space. It will be interesting to see how they position it.

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Visible Technologies


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I recently attended the WTIA Fast Pitch Forum & Technology Showcase. The conference featured two dozen of the hottest technology companies in Washington presenting their business in a competition for “Best In Show”. Visible Technologies is the parent company bringing you TruCast, which is a comprehensive social media management solution. TruReputation is an online reputation management tool.

Visible Technologies gives their customers high-value strategic solutions supported by proprietary world-class technology and measurable results. Whether it’s building or managing reputations across popular search engines, or helping companies track and participate in influential consumer created content channels, they empower brands to do more online to build their businesses and bottom lines.

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BuddyTV


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I recently attended the WTIA Fast Pitch Forum & Technology Showcase. The conference featured two dozen of the hottest technology companies in Washington presenting their business in a competition for “Best In Show”. BuddyTV’s goal is to bring entertainment and content closer to fans. We do this by building communities around popular TV shows and movies. Fans are able to learn more about their favorite shows through interviews, news features, and by connecting with other fans.

Star Points are earned by users when they help build the BuddyTV community. Users with more Star Points gain recognition and privileges that other members don’t receive. Users earn Star Points for things like playing games and quizzes, creating quizzes of their own, adding favorites to their profile, inviting others to join, and reading articles on the site.

Users can buy virtual gifts for their friends using their Star Points, or use them to bid in real auctions. The virtual gifts cost 1,000 Star Points, and the auctions depend on the bid placed before.

BuddyTV is fast becoming one of the largest entertainment destinations on the Web today. Don’t miss out on all you can do, and the fun you can have, on BuddyTV.

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