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Tax Issues Section 199 Deduction
(Acrobat document) January 3, 2006. Comments from SoFTEC to the IRS on the proposed Treasury regulations concerning the deduction for income attributable to domestic production activities under Section 199 of the Internal Revenue Code of 1986 (ÒSection 199Ó).
(Microsoft Word document) At the July 12, 2005 meeting with software industry representatives and Treasury and IRS Associate Chief Counsel (Passthroughs and Special Industries) and other IRS Chief Counsel officials, we discussed the issue of how Section 199 should apply to software maintenance contracts ...
(Acrobat document) (SoFTEC's letter to provide the software industry's view on how the term "any computer software" should be construed for purposes of I.R.C. Section 199(c)(5)(B) in upcoming proposed Treasury Regulations.
(Microsoft Word & Acrobat documents) The Treasury Department, in January of 2005, issued guidance that restricts the availability to software companies of the Section 199 deduction for domestic production activities. In particular, the guidance provides that the deduction is not available unless the software vendor delivers a copy of the software to the customer. Software companies that provide their customers with online access to their product's functionality will not be able to claim the deduction with regard to revenue from that source. SoFTEC is working to have Congress cure this anomaly in its upcoming technical corrections legislation. The following documents chronicle the issue: Cuno Decision
(Microsoft Word & Acrobat documents) In September of last year, the U.S. Court of Appeals for the Sixth Circuit issued an opinion holding that state level economic tax incentives violated the Commerce Clause of the U.S. Constitution. In the case of Cuno v Daimler Chrysler, the Court ruled that an investment tax credit offered by the state of Ohio and relied upon by Daimler to expand an auto plant in Ohio was invalid. SoFTEC is participating with a coalition of companies and trade associations to advocate for federal legislation overturning the decision. The decision, legislation and background materials can be found here: Streamlined Sales Tax Project
(Microsoft Word document) SoFTEC's letter to request the New Jersey General Assembly defer extending the New Jersey sales and use tax laws to "digital goods" until the SSTP completes its work and the Streamlined Sales Tax Implementing States (SSTIS) adopts it as an amendment to the Streamlined Sales and Use Tax Agreement.
(Microsoft Word documents) Section 312 of the Streamlined Sales and Use Tax Agreement adopted in November of 2003, provided that in cases where computer software delivered electronically was to be used concurrently in more than one location, the customer was required to provide the vendor with an exemption form claiming multiple points of use (MPU). Upon receipt of the MPU exemption form, the customer was relieved of all responsibility for collecting and remitting sales tax and the customer was required to allocation the transaction to the jurisdictions where the software was to be used. SoFTEC complained that the limitation of this section to software that was delivered electronically was too narrow and asked the SSTP to amend the provision to expand its use to software regardless of the method of delivery. SSTP responded to our request and at the April 2005 meeting of the Streamlined Sales Tax Implementing States, approved an amendment to the SSTP. Relevant information on this issue can be found at:
(Microsoft Word documents) SoFTEC has asked the SSTP to amend the Streamlined Sales and Use Tax Agreement to include a section providing uniform treatment of software maintenance contracts. The SSTP, at this time, has only had preliminary exposure to this issue and it uncertain when they will undertake further consideration of the proposal. SoFTEC's proposal and description of the issue: International Tax
APRIL 11, 2003, (Adobe Acrobat document) H. R. 1769: A Bill to amend the Internal Revenue Code of 1986 to comply with the World Trade Organization rulings on the FSC/ETI benefit in a manner that preserves jobs and production activities in the United States.
Levin/McCain Stock Options Bill
(Adobe Acrobat document) A Bill to amend the Internal Revenue Code of 1986 to provide that corporate tax benefits from stock option compensation expenses are allowed only to the extent such expenses are included in a corporation's financial statements.
Oppose S. 1940, The Levin Mccain Stock Options Bill
The Accounting And Tax Treatment Of Stock Options Are Transparent And Consistent
Comparison Of Accounting And Tax Treatment Of Employee Stock Options
Enron And Employee Stock Options Stock Options
(Microsoft Word document),December 13, 2000 Written in response to the request for comments set forth in Announcement 2001-92 regarding the separate reporting of income from the exercise of nonstatotury stock options in box 12 of Form W-2, using code "V."
(Microsoft Word document), March 29, 2000
(Microsoft Word document), January 21, 2000
SoFTEC Comment Letter on Proposed Regulations 1.861-4
(Microsoft Word document), Comment on your proposed regulations and Notices 2001-72 and 2001-73, which deal with the employment taxation of statutory stock options (employee stock purchase plans under Code section 423 ("ESPPs") and incentive stock options under Code section 422 ("ISOs")).
Notice 2001-14: Part III - Administrative, Procedural, and Miscellaneous Application of Employment Taxes to Statutory Options
Employee Stock Purchase Plans And Wage Withholding: Background
Employee Stock Purchase Plans And Wage Withholding: Summary
Electronic Commerce
(Microsoft Word document) August 25, 2003 I write on behalf of the Software Finance and Tax Executives Council (SoFTEC) in response to your open consultation concerning whether Member States' VAT compliance requirements should be harmonized and whether traders doing business across frontiers should be allowed a single place of compliance for VAT purposes ...
SoFTEC Response to European VAT Consultation Paper: VAT-The Place of Supply of Services
Proposed Directive amending Directive 77/388/EEC, from the Commision of the European Communities
Summary of the of the proposed directive amending Directive 77/388/EEC
(Adobe Acrobat document) This document contains the changes to the Commentary on the OECD Model Tax Convention adopted by the Committee on Fiscal Affairs on 22 December 2000 concerning the issue of the application of the current definition of permanent establishment in the context of e-commerce. It follows two previous drafts which were released for comments by Working Party No. 1 in October 1999 and March 2000.
(Microsoft Word document), Approved: December 22, 2000 Agreement to simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance for all sellers and for all types of commerce.
SoFTEC Judiciary Committee Testimony
SoFTEC Ways and Means Committee Testimony
(Microsoft Word & Acrobat documents) As an counterbalance to federal legislation that would sanction the efforts of the states under the Streamlined Sales Tax Project and allow for repeal, under certain circumstances, of the physical presence standard for sales and use tax collection by remote vendors, Congress is considering legislation that would enact bright line physical presence nexus standards for state level business activity taxes. Relevant information can be found here:
(Microsoft Word document) Explanation of business activity tax nexus provisions
(Microsoft Word document) Explanation of business activity tax nexus provisions
Industry-Supported Discussion Draft
Internet Tax Legislation Key Features of Industry Supported Discussion
Streamlined Sales and Use Tax Agreement
(Adobe Acrobat document) February 1, 2000 Report to Working Party No. 1 of the OECD Committee On Fiscal Affairs by the Technical Advisory Group On Treaty Characterisation of Electronic Commerce Payments
Technical Advisory Group On Treaty Characterization Of E-Commerce Payments
Comment on Draft TAG paper on Treaty Characterization of E-Commerce Payments Information Reporting
R & D Credit
(Microsoft Word documents) January 12, 2006. Press release from SoFTEC on behalf of the U.S. software industry requesting that Congress quickly negotiate a conference agreement and pass tax legislation including the identical R & D tax credit provisions.
(Microsoft Word documents) SoFTEC is actively engaged with the R & D Credit Coalition to again extend the R & D tax credit which expires at the end of this year. In addition to making the credit permanent, the Coalition's objectives include increasing the rates of the Alternative Incremental Research Credit (AIRC) and the enactment of a new Alternative Simplified Credit. Legislation consistent with these objectives has been introduced in both the House and the Senate. Links to relevant documents and information follows.
(Microsoft Word document), December 14, 2001 Summary, prepared by SoFTEC, of Proposed Treasury Regulations Under Section 41, Research And Experimentation Tax Credit.
Credit for Increasing Research Activities
SoFTEC Amicus Curiae-TAASC
TAASC Main Brief
TAASC v. United States, Order Granting Taxpayers Motion for Summary Judgment
Tax and Accounting Software Corporation, et al, v. United States, Brief for the Appellant
Analysis of 41(d) Regulations
41(d) Regulations
41Notice 2001-19: Part III - Administrative, Procedural, and Miscellaneous Comments on Research Credit Regulations Foreign Sales Corporations (FSC)
(Microsoft Word document) Comment on your proposed regulations and Notices 2001-72 and 2001-73, which deal with the employment taxation of statutory stock options (employee stock purchase plans under Code section 423 ("ESPPs") and incentive stock options under Code section 422 ("ISOs")).
(Microsoft Word document) In 1997, the European Commission (EC) requested consultations with the U.S. regarding the FSC provisions' alleged noncompliance with World Trade Organization (WTO) rules prohibiting certain export subsidies.
WTO-FSC Panel Decision: United States -- Tax Treatement for "Foreign Sales Corporations"
For information about SoFTEC membership or current initiatives, contact: Mark Nebergall, SoFTEC President, at (202) 331-9533, or mnebergall@softwarefinance.org. © Copyright 2004, Software Finance and Tax Executives Council |