[pkmehta]

This is going to increasingly become common esp as governments try to cover budget gaps. We just went through a sales tax audit for our SaaS company and so are expecting a good size bill for taxes not paid + penalties. Yes - fun stuff.

Honestly, the gov't folks are playing whack-a-mole here trying to keep up with fast-growing areas that don't fit the old "you sell this widget for $X" model they're used to. And so they're going to write overly broad rules as they don't understand technology and related industries. There is no intrinsic reason that SaaS should be free of tax and so the more worrying aspect of this legislation (NY has similar) is that it is so difficult to understand and open to interpretation and the mental tax it imposes on businesses who live in a cloud of of uncertainty about how they should treat their revenues.

That said, I think the idea that it will drive biz out of the state is naive. California is not a particularly biz friendly state in terms of taxes but the Valley and even LA seem to be doing just fine.

[MetaCosm]

I stopped working with a client already over this. Simply put, cash-flow wise I can't currently risk taxes and penalties. It turned a customer into a liability because of the horrible wording and unclear guidance (seriously, they want us to pro-rate by the % of our software used in the state?).

I suspect many other small start-ups will make the same choice we did until this all gets sorted out.

[grumps]

Out of curiosity - what made you feel that burden was placed on your company? From what I saw if you didn't have a MA tax ID and didn't have a physical presence in the state that burden would be placed on the purchaser.

Personally I read that it's kind of like sales tax, and buying online. If the seller doesn't do business in the state you reside it's up to the purchaser to pay the tax.

[MetaCosm]

My lawyer was unable to assure me of this -- the law is terribly written. Due to the nature of the data worked on, I have to travel to MA and do a major component of the work on site.

My understanding is "rewording and clarifications" are coming. I know my client (employes hundreds of people) has unleashed a bit of hell over this -- we will see what will happen.

[NoPiece]

California's unemployment rate is 8.6%, 1 full point higher than the national rate, in spite of the booming tech sector. A lot of people in California are doing terribly. For example, Imperial county's unemployment rate is 23%. Around half the counties are still over 10%.

[asmithmd1]

SaaS was certainly not "free of tax" before this - businesses pay state income tax and developers who created the service pay state income tax. Now any Massachusetts based SaaS is at a 6.25% price disadvantage to an out of state business.

[cinquemb]

San Bernadino and Stockton already went bankrupt, so I guess bond holders exposed there were just fine with that.

It's a game of wack a mole, and like all arcade games, they end pretty quickly when you can no longer put any more coins in.

[dickbasedregex]

There are a ton of reasons the stay in or set up shop in California. Talent pool, established community, etc. I can't think of any for Mass. Massholes.

[andyakb]

MIT? Harvard? Dozens of other schools? Huge medical research field? Come on.