WEST SPRINGFIELD, Mass (WWLP) - The new tax is focused mostly of computer software, but business owners are finding the language of the law difficult to understand.
The Sales and Use Tax on Computer and Software Services went into effect July 31st, as a provision under the transportation finance law.
Tax expert Andrew Pignataire thinks IT companies will be hit the worst because each aspect of what they do is eligible to be taxed: from the design of a software system through its installation, and just about every step in between.
"It looks like everything they do, there is going to be a sales tax on," Pignatare said.
One example Pignatare explained was adjustments to current software will now be taxed.
"If an IT company comes into a private company and actually modifies the software, and all the consulting involved with the modification of the software is taxable, but just the wording is pretty vague," Pignatare said.
This confusion has forced the Department of Revenue to take extra steps to clear up any questions.
There is a frequently asked questions list that the Department of Revenue urges you to consult. It is a rather lengthy list, currently about 30 questions long, but they said is does outline more specific scenarios that you may encounter with this new tax.
The Department of Revenue also told 22News that that list is being modified daily to adjust the new questions coming in.
They warn this tax is still new so aiding everyone along the way will be an ongoing process.
In the next few weeks they will begin holding focus groups across the state to further answer businesses questions.
They also encourage you email email@example.com or call in with your questions to (617) 887-6367.
The tax expert also told 22News this tax is not only confusing, but is so broad that he fears it could drive IT businesses out of state.