Monthly Archives: August 2013

Massachusetts Enacts Sales Tax on Computer Services

On July 31st 2013, Massachusetts law makers quietly enacted a new sales tax regulation hidden within the much reported on Gasoline and Tobacco tax increases.

Many IT service providers are still not even aware of this new regulation or how it will affect both their business and that of their clients.

Basically, effective July 31st, Computer Service providers and consultants are now required to charge 6.25% sales tax on all professional services relating to the services defined in the NEW definition of “services”.

The “Legal Speak”
According to The Mass Department of Revenue (DOR)   “The term “Services” shall be limited to the following items, telecommunications services, computer system design services and the modification, integration, enhancement, installation, or configuration of standardized or prewritten software.

The application of the sales and use tax to Computer/Software Services will not apply to personal or professional services that do not themselves constitute computer system design. Or software modification services and that are not directly related to a particular system integration project involving the sale of computer hardware or software. Two examples of such non-taxable and professional services may include (1) consulting and evaluation services with respect to existing computer systems to identify deficiencies and needs and (2) services to prepare a business to use modified software, such as training.”

The DOR intends to provide “additional guidance” in the future regarding application of this services tax. The initial guidance provided by the state, as stated in TIR 13-10, is currently very limited and the law, in its current iteration, is very open ended and as should expected, favors the State and not the consumer of these types of services.

So, in a real life example, this means that when a consumer purchases a piece of software (say an antivirus program)and then hires a third party (computer guy) to install and configure that software, the third party (computer guy) is required to charge the consumer 6.25% sales tax on the hourly rate charged to perform the installation.

Another example – when a consumer buys a new computer system and then engages a computer service company to install and configure it for them – the computer guy must charge sales tax on the service rate he charges to perform this work. Business network service and installations will incur the same 6.25% sales tax as well.

One more example – If you or your company hires a web designer/consultant to build, update and/or modify your website, this type of service is now taxable as well.

My interpretation – As we see it, this impacts almost all of our clients and the services that we provide and every home or business computer user that hires a third party to perform pretty much any service on their computers and networks! We have reached out to our tax accountant as well as the Mass DOR to get a more exact definition and will report any new information we receive.

I’ve personally called around to dozens of computer service providers both large and small throughout the South Shore and in every single instance, the Service providers are still operating under the “old” tax regulations and have not yet adopted these new requirements. It’s only a matter of time – when these companies start seeing the new online ST-9 sales tax reporting forms requiring that they separately report and pay their service tax liabilities – they will be playing and paying catch up with the Mass DOR.

I’ll be talking about this with Kevin Tocci, Monday night between 6:30 and 7:00 on Monday Night Talk on 95.9 WATD. I’ll also be discussing it with Rob Hakala and Lisa Azizian on my regular Tuesday morning spot on the South Shore’s Morning News Show at 8:11am, also on WATD. Tune in or you can listen LIVE on the website at 959watd.com.

Link to the new law as posted on MASS DOR website:
http://www.mass.gov/dor/businesses/help-and-resources/legal-library/tirs/tirs-by-years/2013-releases/tir-13-10.html

Article/post in The Boston Business Journal:
http://www.bizjournals.com/boston/blog/techflash/2013/08/the-new-sales-tax-on-computer-and.html

If you want to be even more confused about this law, have a look at this site:
http://repealtheitservicetax.com/

 

Are You Watching TV Or Is It Watching You

It’s not enough that we need to worry about the security cameras installed on every other telephone pole, street sign and office building – NOW we need to check the TV sets in our living rooms.

Today’s high-end televisions are almost all equipped with “smart” PC-like features, including Internet connectivity, apps, microphones and cameras. But a recently discovered security hole in some Samsung Smart TVs shows that many of those bells and whistles aren’t ready for prime time.

The research was conducted on different models of 2012 Samsung Smart TVs and was presented this week at the Black Hat cyber security conference in Las Vegas.

In a formal statement, Samsung said it takes user safety very seriously. Addressing the camera flaw, a company spokesperson said, “The camera can be turned into a bezel of the TV so that the lens is covered, or disabled by pushing the camera inside the bezel. The TV owner can also unplug the TV from the home network when the Smart TV features are not in use.” Samsung also recommends that customers use encrypted wireless access points.

The flaws in Samsung Smart TVs, which have now been patched, enabled hackers to remotely turn on the TVs’ built-in cameras without leaving any trace of it on the screen. While you’re watching TV, a hacker anywhere around the world could have been watching you. Hackers also could have easily rerouted an unsuspecting user to a malicious website to steal bank account information. Samsung quickly fixed the problem after security researchers at iSEC Partners informed the company about the bugs. Samsung sent a software update to all affected TVs.

Bottom Line: When all else fails or you’re just not sure…. you can always put tape over the cameras. A low tech solution for a high tech problem.

These types of glitches speak to the larger problem of gadgets that connect to the Internet but have virtually no security to speak of.

If something can connect to the internet, it can be hacked. Security cameras, lights, heating control systems, smart implanted medical devices and even door locks and windows are now increasingly coming with features that allow users to control them remotely. Without proper security controls, there’s little to stop hackers from invading users’ privacy, stealing personal information or spying on people.

Black Hat 2013: http://www.infosecurity-magazine.com/view/33780/black-hat-2013-researchers-demo-how-smart-tvs-can-watch-you-/

 

 

 

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