Business owners blast new computer services sales tax

LYNN – Computer service company owner Richard Trahant said a new state computer services sales tax hits him where it hurts and he welcomes dual efforts to repeal it.Approved by the state Legislature in July as part of a transportation financing package, the 6.25 percent sales tax applies to services related to computer system design and installation of standardized or pre-written software.Trahant, president of Peabody-based Land Computer, said the new tax translates into an added expense for consumers.”It means people are going to be paying a lot more when it comes to software-related services,” he said.Questions filed last week for review and inclusion on 2014 state ballots include one repealing the service tax. State Sen. Karen Spilka, a Democrat, also filed legislation to repeal the tax.State Revenue spokeswoman Ann Dufresne said revenue officials received more than 200 inquiries from computer firm owners after the tax’s approval on July 24. The tax became law a week later and Dufresne said it will raise an estimated $161 million annually.The first filing date for businesses is late September.Saugus Republican Donald Wong said he is more than willing to reach across party lines and support a repeal, adding he initially opposed the tax’s inclusion in the transportation financing legislation.”I hope they take it out. It’s going to affect all businesses,” Wong said.The Route 1 restaurateur said area computer service company owners have called him to complain about the tax and warn that “it is the tip of the iceberg” – a first stab at greatly expanding sales taxes on services provided by businesses as well as the goods they sell.To illustrate his fears, Wong used an analogy involving a transaction most people are familiar with.”If you’re paying full-service gasoline, you are paying a tax on the gas, but are you going to pay a tax for the service too?” he asked.Formerly located in Lynn, Land Computer has repaired computer and software problems for 23 years, specializing, Trahant said, in small and medium businesses. He said the tax presents a potential accounting headache for business owners. For instance, replacing a customer’s computer hard drive would involve writing up an invoice reflecting costs including the tax on the service charge related to replacing the defective part.”It would take a lot more time to figure out what part of a service charge is taxable. The confusion would be immense,” he said.The Revenue Department website features information on the service tax and Dufresne said state tax officials have met with computer service providers to hear their questions and complaints.”We’re doing an incredible amount of work to determine who this pertains to and who it doesn’t pertain to,” Dufresne said.Wong said fellow legislators were focused on finding ways to fix the state’s transportation problems when they approved the financing bill that includes the tax. He said the momentum building to repeal the tax offers a cautionary tale for legislators to heed.”With everything we do up here, we should maybe take a closer look at what we’re voting on,” he said.