Final Senate Reading and Vote Tomorrw for HB1192 - Contact Your Senator Today
Tuesday, February 9, 2010
Posted by: Nikki Mill
HB1192 unfortunately passed (by just one
vote!) through the 2nd reading and vote of the Senate yesterday
evening. It is scheduled for its THIRD AND FINAL
reading by the full Senate THIS AFTERNOON. This is the LAST chance we
have, with our Senators to ensure this bill is not made into law by March 1,
If you contacted your Representatives (The
House) early this month, thank you, but please make sure you also contact your
Senators. These are different people,
who also need to hear what this proposed bill could do to you, your job, your
family and your company. THEY READ emails,
blogs, articles, Facebook postings, WHILE THEY ARE IN
SESSION! So, please take 2 minutes and
write a simple and to the point email or posting on how this bill could affect
An amendment was removed last night that
would have allocated 40% of the revenue from this software tax to go to K-12
education. Over the past few weeks, supporters of the bill have stressed that
this bill represents a shared burden, and that if not this tax, then cuts will
have to be made to K-12 education. Our question now is, with this amendment
removed, what is the true intention of this bill?
key reasons why this bill is so damaging to users of technology and the
companies across all industries who use software would be required to pay sales
tax on all software they purchase or download, based on the number of employees
in Colorado who use the software. Imagine what this will mean for companies
who employ large numbers of people in the state? What about companies who have
operations outside of the state? Not only will it assess tax for Colorado
employers, but companies who can move projects or work outside the state will
have a legitimate and economic reason to do so. If your company is a regional
operation, it means you will have to assess the software used by your Colorado
employees, no matter where the software is purchased or loaded.
2. For data
centers in the state, all of the software used in the center will now be taxed,
no matter if you purchase via download or through a licensing agreement.
That's on top of the taxes you already pay for hardware and
3. For those
of you who develop software, if you have one user, no tax. As soon as a
second user is sold, your software becomes taxable.
4. If you develop
software and have identified a potential sale as part of your exit, be very
careful. The software you develop may become taxable at the time of sale,
making it harder for you to sell.
5. While we
appreciate the efforts made last week with Senator Heath and others, we continue
to be concerned about the interpretations that will be made by the Department of
Revenue, especially after it is promulgated. All companies in the state will be
asked to follow these regulations, even though the Department of Revenue
suggests that all communications, clarifications, and information can be handled
with only one new full-time employee (but no mention about part-time or
contracting that would be necessary, adding even more cost).
Colorado will become one of only 12 states in the US with such costly
taxes on software, so our neighboring states like Utah and Wyoming are
already identifying ways to encourage you to move operations or set up
additional offices. Washington, California, Florida and others have looked at
taxes like this and decided NOT to have them because of the huge consequences
for their tech industries. All together, there are nearly 40 other states who
have chosen not to enact such costly regulations - regulations that will hurt
not only software and IT companies, but all industries who utilize software and
7. Though this tax is being promoted as only
a 2.9% state tax, remember that in Colorado, local jurisdictions, counties and
others add in theirs as well, so the new tax will actually become more like 7
- 10% in new taxes.
So what can you
Use your networks to push this information
out – challenge the removal of the amendment that would have kept 40% of all new
revenue for K-12r encourage business leaders within your networks to continue
commenting on this bill and its negative impacts. Let our important elected
officials know that if they oppose the bill, we appreciate their support of our
industry. If they are supporting the bill, please ask them why they now no
longer want the new revenue to go towards education.
Again, we cannot thank you enough for joining
our community to help stop this bill from being signed into law.