Washington state’s Dept. of Revenue is performing a major overhaul to longstanding rules governing the taxation of computer hardware. computer software and computer services.

In addition, DOR is adopting rules on the taxation of digital goods and products, pursuant to legislation passed in 2009 and 2010.  The tax on digital goods and products (including “digital automated services”) leveled the playing field between tangible and non-tangible products, such as downloaded books, music and video, all of which are subject to sales tax in the physical world.

It is critical that everyone in the software business digest these rules and see if they affect your company.  When longstanding rules like these are rewritten, there are sure to be new areas for the state to find ways to take more of your money.  Dept. of Revenue is well known to “move the ball” on a regular basis to take a larger bite out of businesses.  The tech/software/internet industry is a prime target.  The tech industry’s innovation in delivering new products and services has raced ahead of most tax collectors ability to keep up.

Here is the link to the draft rules: http://dor.wa.gov/Docs/Rules/draft/20-15501cr2etall.pdf

DOR full rulemaking agenda is here: http://dor.wa.gov/content/FindALawOrRule/RuleMaking/agenda.aspx

A public hearing is scheduled for next Wedneday, October 3 at 10:00 a.m. in Olympia.  See the link for more information.  You can submit written comments, too.  WTIA encourages you to do so if you see any problems for your business.  Please contact us at Lmcmurran@washingtontechnology.org if you have issues with the rules that you’d like WTIA to express at the public hearing.