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News & Press: Colorado Technology Industry

Legislative Update – Software Tax

Thursday, January 28, 2010   (0 Comments)
Posted by: Nikki Mill
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January 28 Update:

Despite a 12-hour wait and compelling testimony from key CSIA Board members, volunteers and leaders in our community, HB 1192 advanced early Thursday morning by a very narrow margin of 6/5 last night and is scheduled to be heard next before the House on Friday morning.

We appreciate your support and because of your tweets, posts, comments and phone calls, we’ve been able to draw great attention to our effort, and every communications you do, makes a significant difference.  When you have a moment, please share a thank you with the industry leaders who provided testimony at yesterday’s hearing. (Listed below.)

This is the most serious issue we have faced in more than a decade in Colorado technology history, and so we still need everyone to speak up, tweet, post, email or otherwise raise the concern about this bill.  Because it will affect every company in every industry, this not only impacts our critical software and IT services companies, but every technology user in our state.

In fact, did you know that under the new tax regulation, the following could happen:

  • Data centers will have to collect tax from all of its customers that had "users” with access to the SaaS system located in Colorado. 
  • Charges to customize "base software” could be taxable if not separately stated from the overall purchase of software.
  • Taxable software would include all prewritten updates/upgrades.  (If these charges are not separately stated from a maintenance fee, the full charge for maintenance and update becomes taxable.
  • And many other scenarios – none of which would help our industry or our customers in Colorado.
We have a growing battle ahead of us and it’s important that we continue to tell everyone and anyone the devastating impacts this bill will have on our industry and our state.

The time to act is NOW. We need supporters like you to contact your House representative by phone TODAY and explain to them why this new tax will be devastating for Colorado’s economy. (A few key points and House representatives’ contact info are listed below).

Additionally, please help us make this Denver Post article the most commented of the day to increase awareness and pressure on our representatives to look more closely at the issue.  Please comment!

  • HB 1192 is a brand new tax on which Colorado taxpayers will not have an opportunity to vote – a potential violation of our state Constitution (TABOR Amendment).
    • This new software tax is being lumped together with twelve other exemption/credit reversals in an effort by the governor’s office to rush this through legislation. The new software tax is a separate and highly problematic new tax that will have a devastating impact to Colorado’s economy because it affects every company in every industry.
    • Of the 13 tax exemptions rushed through the House Finance Committee last night, Representative Gerou called HB 1192 the most damaging, in terms of the impact it will cause to jobs.
    • This bill is vague and poorly written – the trickle-down effect of this bill could be endless, and the loss in revenue.
  • HB 1192 will cost Colorado jobs and give us the reputation of being unfriendly to business.
    • The more than 175,000 professionals in this industry earn an average of $88,000 per year  - more than twice the median salary of all Colorado professionals in the state. Within that industry, employers are announcing plans to cut jobs or leave the state if this bill is passed.
  • This bill will raise taxes on ALL businesses in Colorado who use technology.
    • Your veterinarian, your favorite restaurant, your bakery, your hair salon, your telephone company, your cable company, your brewery, etc. This could stifle new job growth and cause existing/new jobs to go elsewhere.
    • While the Revenue Department is estimating $15 million revenue from this tax in the next year, we expect the revenue loss from the technology industry to far surpass that amount.
Thank you to the CSIA members – and others from Qwest, PriceWaterhouseCoopers and the Northern Alliance -  who provided excellent testimony and company/industry perspectives:

Stacey Alexander, Programs Chair, Society for Information Management
Peter Cheesbrough, Executive VP and CFO, CIBER, Inc.
Barry Clark, President, WestFAX
Anthony Franco, President, EffectiveUI
Carl Fitch,CEO, Statera
Marion Jenkins, CEO, QSE
Ida Lau, President, Veripoint
Tom Melaragno, President and CEO, Compri Consulting Inc.
Micki Nelson, CIO, MWH
Kirby  Slunaker, CIO, Pendum
George Tyler, Partner & Vice President, CxO To Go

House Representatives
Rep. Dennis Apuan (303)866-3069
Rep. Debbie Benefield 303.866.2950
Rep. Terrance Carroll 303-866-2346
Rep. Edward Casso (303)866-2964
Rep. Lois Court (303)866-2967
Rep. Kathleen Curry 303.866.2945
Rep. Mark Ferrandino 303.866.2911
Rep. Randolph Fischer 303.866.2917
Rep. Jerry Frangas 303.866.2954
Rep. Sara Gagliardi (303)866-2962
Rep. Dickey Hullinghorst (303)866-2915
Rep. Joel Judd 303.866.2925
Rep. Daniel Kagan 303.866.4569
Rep. John Kefalas 303.866.2921
Rep. Andrew Kerr (303)866-2923
Rep. Jeanne Labuda 303.866.2966
Rep. Claire Levy (303)866-2578
Rep. Beth McCann (303)866-2959
Rep. Liane McFadyen (303)866-2905
Rep. Wesley McKinley 303-866-2398
Rep. Michael Merrifield (303)866-2932
Rep. Karen Middleton (303)-866-3911
Rep. Joe Miklosi (303)866-2910
Rep. Sal Pace 303.866.2968
Rep. Cherylin Peniston (303)866-2843
Rep. Jack Pommer 303.866.2780
Rep. Dianne Primavera 303-866-4667
Rep. Joseph Rice (303)866-2953
Rep. Jim Riesberg 303.866.2929
Rep. Susan Ryden 303-866-2942
Rep. Christine Scanlan (303)866-2952
Rep. Sue Schafer 303-866-5522
Rep. Judith Solano 303-866-2918

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