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Pennsylvania collecting download tax

Discussion in 'Legal' started by Can'thavenuthingood, Jan 21, 2006.

  1. Can'thavenuthingood

    Can'thavenuthingood Well-Known Member

    The cat's outta the bag, bureaucrats everywhere are slobbering with delight. Politicians are all agog, a new trough access.



    Pa. begins taxing downloads

    The sales tax hadn't been applied to software bought online.
    By Bob Fernandez
    Inquirer Staff Writer

    With a court case going unchallenged, Pennsylvania has begun collecting the 6 percent state sales tax on downloaded software.

    A key exception is songs grabbed from the Internet for iPods and personal computers, Steve Kniley, Revenue Department spokesman, said this week.

    The new policy amounts to a tax hike and is expected to generate revenue of $55 million to $60 million a year for Pennsylvania from businesses and individuals.

    Companies update large software packages electronically, and these updates will be taxed under the new policy. Consumers also will pay the sales tax when they download software such as tax packages or virus-protection programs.

    The new policy on taxing downloads was not something the Revenue Department "asked for," and the state agency was just following a court ruling, Kniley said.

    A three-judge panel ruled in September in a run-of-the-mill tax case that the Revenue Department's long-standing policy of distinguishing between software on CD and software delivered electronically was silly. The software on CDs was considered tangible property and taxed.

    Software delivered electronically was considered intangible and was not.

    Tax experts, including state officials, expected the September ruling to be appealed by Graham Packaging. The York company filed the original case, but it did not appeal, and the Revenue Department implemented the changes.

    Kyle Sollie, a tax lawyer in the Philadelphia firm Dechert L.L.P., said the new tax would make Pennsylvania a less competitive place for businesses in the region. Delaware doesn't have a sales tax at all, and New Jersey does not tax electronically delivered software.

    Contact staff writer Bob Fernandez at 215-854-5897 or bob.fernandez@phillynews.com.
  2. Manedwolf

    Manedwolf member

    LESS competitive? I didn't think that was possible... :D

    My opinion of PA is that the statue of William Penn in the capital's museum ought to be redone to have him slapping his hand over his eyes in disgust.
  3. Chipperman

    Chipperman Well-Known Member

    Well, at least PA is Shall Issue.
  4. Sindawe

    Sindawe Well-Known Member

    Small packages, like antispyware, is also updated electronically. Will THAT be taxed as well?

    Thieves, the whole lot of them are naught but filthy thieves. :cuss:
  5. Can'thavenuthingood

    Can'thavenuthingood Well-Known Member

    "Small packages, like antispyware, is also updated electronically. Will THAT be taxed as well?"

    As I understand it, yes it is taxed.
    The Camels head is in the tent.

    The majority of the panel then concluded that software, even if delivered electronically, is “stored on a computer’s hardware, takes up space on the hard drive and can be physically perceived by checking the computer’s files” and thus “is taxable as the sale of tangible personal property.”

    This Internet commerce has always been touted as lost revenue. They never had it, so how is it lost?
    The stagecoach went by them before they could organize an ambush. Now it's catch up time. The feds will want their cut, the locals will want a cut. Pretty soon it will be a 30% cost tacked on to anything related to Internet.

    Their taking the sky from me.

  6. antarti

    antarti Well-Known Member

    Can back-door-audits of your PC and JBTs kicking in doors (for that latest McAffee update you didn't pay tax on) be far behind?
  7. Al Norris

    Al Norris Well-Known Member

    Generally, updates are just that. Updates. There is no charge for such. Upgrades are a different animal and are generally chargeable by the software company.

    So how does the State tax an update that has no associated charge? Based on what?

    Someone unconfuse me...
  8. asknight

    asknight Well-Known Member

    How can you tax something that is free?

    This is merely fuel for the Open Source Movement and the Free Software Foundation. A majority of the most powerful software out there is free already. Linux and BSD operating systems, PHPGroupware, GNUCash, etc are very powerful rivals to commercial applications. There are literally millions of other commercial-replacement applications out there.

    For the #1 question from business managers regarding free software compared to commercial accounting applications...




    This also presumes that they've done the impossible... implemented a way to actually know which exact application/update you've downloaded. If they have, then they've broken several federal anti-spy laws in the development of this. They're going to tax updates to applications, which are FREE after you purchase the app originally? Yeah. Right. Antivirus updates taxed?
  9. Gifted

    Gifted Well-Known Member

    I'd think that your winblows updates won't be taxed, as you're not paying for them. Now, you generally subscribe and pay for updates to anti-virus and such, and so you'd pay a tax on your subscription fee.
  10. 000Buck

    000Buck Well-Known Member

    I just moved to PA last year. This state loves taxes!
  11. shermacman

    shermacman Well-Known Member

    Thank God I live in Massachusetts!
    This kind of tax insanity will never happen here!
    Our elected officials will protect us!

    Oh, Great Nanny, hear our prayers, we beseech thee!
  12. KriegHund

    KriegHund Well-Known Member

    New virus update for 1000 computer company...My god.

    This angers me too greatly. It was over taxes that the revolution was sparked.

    I suspect that the tax collecters may want to get the very best in electronic protection, because soon they will be the target of hackers everywhere.
  13. Standing Wolf

    Standing Wolf Member in memoriam

    Yippee! Free money!
  14. tellner

    tellner member

    If you have sales tax at all it makes no sense to give a free ride to some goods just because of the way they're delivered. All you're doing is picking winners by giving online merchants a government-mandated advantage.

    Isn't it the conservatives who are always whining about "not picking winners" and "no special rights"?
  15. gezzer

    gezzer Well-Known Member

    Ahh! Whats a sales tax?:neener:

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