cck@deneb.ucdavis.edu (Earl H. Kinmonth) (08/05/89)
I was installing a piece of software today, and in reading through the copyright claim, it asserted that the publisher retained ownership and the user was only ~renting~. Nevertheless, my colleague was charged ~sales~ tax by the vendor, although in California, ~sales~ tax is not (as far as I know) collected on ~rent~. Has anyone tried refusing to pay ~sales~ tax on software where the publisher claims that no sale is involved? It's a shame there is no foundation to support legal tests of the hypocritical claims of software vendors and publishers. My employer could save a rather large amount of money (6-7 percent of software costs) if software acquistion by individual faculty was actually a rent rather than sales situation.
mrm@sceard.com (M.R.Murphy) (08/07/89)
In article <5050@ucdavis.ucdavis.edu> cck@deneb.ucdavis.edu (Earl H. Kinmonth) writes: >I was installing a piece of software today, and in reading through the >copyright claim, it asserted that the publisher retained ownership and >the user was only ~renting~. Nevertheless, my colleague was charged >~sales~ tax by the vendor, although in California, ~sales~ tax is not >(as far as I know) collected on ~rent~. > >Has anyone tried refusing to pay ~sales~ tax on software where the >publisher claims that no sale is involved? > >It's a shame there is no foundation to support legal tests of the >hypocritical claims of software vendors and publishers. > >My employer could save a rather large amount of money (6-7 percent of >software costs) if software acquistion by individual faculty was >actually a rent rather than sales situation. Prof. Kinmonth is mistaken in his understanding of the sales tax in the State of California. The sales tax is charged by the State of California, not the vendor. The State of California gives the vendor the privilege of collecting the tax for the State Board of Equalization (newspeak:-). The vendor also gets to fill out the paperwork for the State. The exact definition of taxable software depends on current interpretation by the State Board of Equalization of legislation passed by the legislature of the State of California. This is a moving target. Try and get a written determination from the State Board of Equalization on the taxability of a particular sales transaction. The basic philosophy of the tax is the State gets the money, whether the transaction is called a sale, a license, a lease, ... The (6-7 percent) range mentioned in the posting above is caused by taxes that vary based on the source and destination of the sale. What a pain. BTW, the University of California has at least one RESALE certificate from the State of California. Sometimes they use it to avoid the tax, sometimes they don't. Near as we can tell, the determination for use is based on the last digit of the shoe size of the buyer involved. --- Mike Murphy Sceard Systems, Inc. 544 South Pacific St. San Marcos, CA 92069 mrm@Sceard.COM {hp-sdd,nosc,ucsd,uunet}!sceard!mrm +1 619 471 0655
Horne-Scott@cs.yale.edu (Scott Horne) (08/07/89)
In article <5050@ucdavis.ucdavis.edu>, cck@deneb (Earl H. Kinmonth) writes: > I was installing a piece of software today, and in reading through the > copyright claim, it asserted that the publisher retained ownership and > the user was only ~renting~. Nevertheless, my colleague was charged > ~sales~ tax by the vendor, although in California, ~sales~ tax is not > (as far as I know) collected on ~rent~. Demand a refund at the store, and tell them that they shouldn't be paying taxes on the "rented" merchandise. What goes around comes around. If software vendors want to get cagey with their words, then let's just see them explain these "rentals" to the government. Is rental permitted in the business licenses of these software companies? Why aren't the terms of the "rental" specified more clearly? If the software is being "rented", then aren't we "lessees" entitled to some maintenance (upgrades) at the expense of the "lessors"? And isn't it interesting that one isn't informed that he is "renting" the software until he opens the package--long after he has given his money on the assumption that he *purchased* the software? Someone has some explaining to do. --Scott Scott Horne Undergraduate programmer, Yale CS Dept Facility horne@cs.Yale.edu ...!{harvard,cmcl2,decvax}!yale!horne Home: 203 789-0877 SnailMail: Box 7196 Yale Station, New Haven, CT 06520 Work: 203 432-1260 Summer residence: 175 Dwight St, New Haven, CT Dare I speak for the amorphous gallimaufry of intellectual thought called Yale?
rrt@halley.UUCP (Robert Teisberg) (08/08/89)
In article <5050@ucdavis.ucdavis.edu> cck@deneb.ucdavis.edu (Earl H. Kinmonth) writes: >I was installing a piece of software today, and in reading through the >copyright claim, it asserted that the publisher retained ownership and >the user was only ~renting~. Nevertheless, my colleague was charged >~sales~ tax by the vendor, although in California, ~sales~ tax is not >(as far as I know) collected on ~rent~. > >Has anyone tried refusing to pay ~sales~ tax on software where the >publisher claims that no sale is involved? > Check your state sales tax statute. In Texas, until recently, software was not subject to sales tax (not because of some legal fiction about "rental," but because supplying software was considered a non-taxable service). Two years ago the Legislature tried to partially offset its oil-glut-induced revenue shortfall by specifically assessing sales tax on software. I wouldn't be surprised if California did something similar. In other words, it may not matter whether it's called "rent" or "sale." Here, at least, as long as it's called "software," it's taxable (:-(). -- Bob Teisberg @ Tandem Computers, Inc. | ...!rutgers!cs.utexas.edu!halley!rrt 14231 Tandem Blvd. | soon to be rrt@mpd.tandem.com Austin, Texas 78728 | (512) 244-8119 Any resemblance to the opinions of a real person or corporation is concidental.
jacka@hpcupt1.HP.COM (Jack C. Armstrong) (08/08/89)
In many states (e.g. California) there is an attempt to tax and otherwise encumber software developers, many of whom wish to be classed as a 'service' industry. We do not, for example, pay sales taxes on dental work. (We do on a toothbrush). One is a service, the other a product. Speaking as an ex-consultant who often wrote custom software, I can tell you it is not just an attempt to save the customer's money, it is a grade-A pain for a small operator to sell a 'product' instead of a 'service'. When the project involves delivery of software, one recommended tactic is to *not* sell the software - read the fine print - you may discover that the authors have given you an 'unlimited license to use', but in fact retained ownership of the software itself. This, of course, brings up the ugly matter of inventory tax - if Borland really retains 'ownership' of all that software, they may owe a heap of inventory tax come January. In the case of shrink-wrapped software, I find it hard to classify as a 'service', but what about the individually customised accounting package that comes with considerable onsite training and support? Things tend to get a bit fuzzy. Many attorneys in California suggest that software houses *not* charge sales tax, but place funds in escrow, just in case the state rules that it should have been collected. Sort of makes you wish for the good old days of nice, clean radical ethics again - Down With The Tyranny of Government!!
ehr@ecsvax.UUCP (Ernest H. Robl) (08/09/89)
In connection with the ongoing discussion as to whether one should have to pay sales tax on software: This is not the only area where this problem comes up. Photographers who sell to publications often have the same problem. (For those not familiar with the field, there's such a thing called "stock photography" where the publication buys rights to the use of a particular picture but the photographer retains rights to physical image and can later sell rights to it to another client. I deal with this while wearing my other hat -- that of freelance writer/photographer.) Why bring this up in a computer newsgroup? Because the real problem is dealing with the state (or sometimes Federal) tax people who don't understand their own regulations, if they know anything about them at all. With the volume of business that I currently do with my photography, most of my income from that area would be eaten up if I had to employ the services of an accountant and an attorney. Yet it appears to be very difficult for the small businessperson to get along without them. I often feel that the current tangle of regulations is stacked against the small enterpreneur, whether he's providing photos or software. I really don't care so much if I have to collect sales (or use) tax for certain activities or products, as long as someone can tell me clearly WHEN I have to collect it. Since I'm apparently one of only a handful of people in North Carolina dealing in stock photography, the N.C. tax people never have any clear answers. Well, that's my $0.02 for this discussion. -- Ernest -- My opinions are my own and probably not IBM-compatible.--ehr Ernest H. Robl (ehr@ecsvax) (919) 684-6269 w; (919) 286-3845 h Systems Specialist (Tandem System Manager), Library Systems, 027 Perkins Library, Duke University, Durham, NC 27706 U.S.A.