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Re: [cofeng] FW: URGENT Update on New Software Taxes

From: Terrence S.
Sent on: Tuesday, January 26, 2010 7:44 PM
  Can you share this? I am sure you know some good people who see that this tax will hurt Colorado.

Terrence J. Smith
Skype id: tjsmith80919

This is moving fast. Take action now, if you Colorado we should not have a new tax on all software, whether packaged, remote accessed or anything in between. See the list below of the House Finance Committee Members to contact.

As part of the state of Colorado efforts to collect more taxes, the Governor wants to tax all software sales.  This will be a new tax.  Today, as you know, tax is only collected when a shrink-wrapped software packaged is bought.  
We have found out that Colorado wants to model the new tax law after Massachusetts law.  In Massachusetts, the 4 major criteria for taxing of software now include, but are not limited to:
     Licenses and leases of prewritten software.
     Granting the right to use prewritten software installed on a remote server.
     Upgrades to prewritten software, including upgrades delivered pursuant to maintenance contracts, regardless of whether the software was taxable when initially transferred to the retail customer.
     License upgrades for prewritten software.
Here is a link to the actual legislation from Massachusetts:
As a pro-business advocate, I think that this will drive companies from Colorado as it raises their cost of doing business in Colorado.  There will be mass confusion on what is taxable and what is not.  The state of Utah has told us that they want this tax passed, as they can then get companies to move operations to Utah.  
The memo below that I received from the president of CSIA, Su Hawk.  We need your help to get the word out, and have people contact their members of the legislation to stop this tax.   We appreciate anything that you can do to help us.  
George Tyler
Member of CSIA (Colorado���s technology association) and a part of their public policy committee.  
Partner, CxO To Go

From: Su Hawk []
 Sent: Thursday, January 21,[masked]:01 PM
 Subject: CSIA Public Policy Committee - URGENT Update on New Software Taxes
 Importance: High



Dear Public Policy Committee members (and those members interested in joining),
Thanks for everyone���s attendance at yesterday���s kick-off committee meeting, and now we have new and very concerning updates:
We were informed just late yesterday afternoon in a meeting with the Governor���s office that they intend to proceed with their new tax on the software proposal and will introduce it early next week.  More striking is its effective date has been accelerated to March 1 instead of July 1.  The Governor���s office will attempt to push this bill through the process very quickly and we need to ACT NOW.
The Governor���s office proposed specific language has still not been shared with anyone, so it is possible that sales taxes would be added to all of the following: electronic downloads, IT services (SaaS type services, potentially maintenance services bundled with software updates, and implementation services not separately stated from software licenses), custom development, SaaS-sold software, maintenance agreements, and more, causing a major change in how software companies and buyers operate their business and use any kind of software in our state.

As we discussed yesterday, we would predict that if the state adds a new sales tax, local jurisdictions would follow, creating an added tax burden to buyers of software of as much as 8-10%!  

Colorado would be 1 of only 11 states to effectively tax all software purchases, and while it is difficult to determine the exact cost increase per job, we at CSIA, based upon surveying some of its 5,500 plus industry companies, estimates this amount to range from $400 to $800 per job.

This is ill-advised for a state that depends on technology jobs, and especially because this new tax would impact not only the important software/hardware/IT services industry, but also every other industry because it would be taxing all software used in the state. In addition, just think about all of the business-to-business we���ve been working so hard to create, and now this new tax will cause technology executives to reconsider buying from Colorado IT companies, effectively creating a competitive disadvantage for our important industry.

Please act now and call or email key members of the Colorado House Finance Committee and let them know this is bad for Colorado���s economy because it will cause jobs to move out of our state, hobble important small, medium and large technology companies to be burdened with confusing, complex and expensive taxes, will add costly taxes to all companies across all industry in our state.  
Colorado already is a state commonly deemed by software entrepreneurs and tax professionals to be one of the most complicated in the nation for managing sales tax reporting requirements, and will immediately become a burden on every IT and software company and IT division/department in our state.
Encourage the members of the House Finance Committee to reject these new taxes and instead, help us GROW the industry by working directly with CSIA to encourage companies and jobs to stay here, keep important IT professionals in Colorado, and turn our economy around by focusing on the very businesses who create thousands and thousands of important jobs in our state.  
Tell our legislators and the Governor that the IT industry, representing 5,500 companies and more than 175,000 professionals is critical to the current and future economic strength of our state.  Please speak today.  You will make a major difference for our state and community

The bill will be introduced and heard in the House Finance Committee.  Please call key members of the committee to register your opposition.

House Finance Committee Members:
Rep Joel Judd,
Chair       [masked] <>  
Rep Debbie Benefield, Vice Chair      [masked] <>    (As a note, Representative Benefield attended CSIA���s DEMOgala last October and spent a great amount of time talking with our members, and even introducing us to her son, Tim, who is an IT professional identifying his next opportunity.)
Rep. Daniel Kagan     [masked] <>  
Rep John Kafalas      [masked] <>   (As a note, Representative Kafalas sponsored the bill last spring to create a tax credit for angel investors, so we need to thank him again for that leadership, and ask him to support our position to NOT add more taxes to the very industry he sponsored legislation to help)  
Rep Jeanne Labuda   [masked] <>  
Rep Jerry Frangas     [masked] <>

Call the Governor���s Office to register your opposition to the new software taxes as well:  [masked]-2471.

Please let us know if you���ve made contact and if you had any direct communication with these members of the committee.

Need more details or information?  Please contact us directly, or check out CSIA���s website beginning tomorrow morning.  We���ll have our new legislative relations tool set up so you can also identify key legislators for either your home or business district.

Thanks also to those of you who have been working on this, added in great ideas yesterday, or will be helping us in the future.  
Su Hawk  /  President
CSIA - Colorado's Technology Association
216 16th Street /  Suite 850  /  Denver, CO /  80202 <>  /
O:[masked]  /    C:[masked]    /  F:[masked]

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