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News & Press: Colorado Technology Industry

Final Senate Reading and Vote Tomorrw for HB1192 - Contact Your Senator Today

Tuesday, February 09, 2010   (0 Comments)
Posted by: Nikki Mill
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Legislative Update
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, 2010. 
Your emails, Facebook posts, comments, blogs, tweets, and phone calls have made the difference. Many Senators opposed the bill last night that originally would have supported and it’s your emails and communications that are making the difference. Click here to send a formal email to Senators and for a list and links of Senators who have a social networking presence. 
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 you! 
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?

7 key reasons why this bill is so damaging to users of technology and the software/IT industry: 
1.  All 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 equipment. 
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). 
6.  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 technology.
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 do?  

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.

Thank you!

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