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Software Industry Urges Congress to Seamlessly Extend and Strengthen the Expired Research Tax Credit
(Microsoft Word document)
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.
Working Draft TIR 05-15: Transfers of Prewritten Computer Software Sales and Use Tax
(Acrobat document)
January 6, 2006. Comments from SoFTEC to the Honorable Alan LeBovidge on the draft technical information release (TIR) providing proposed taxpayer and tax administrator guidance on the recently passed statutory change imposing sales and use tax on software delivered electronically and by load and leave and authorizing exemptions when software will be used at multiple points.
Comments on Proposed Regulations Under Section 199
(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).
Proposal For Treatment Of Computer Software Maintenance Contracts Under Section 199
(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 ...
Definition of Computer Software for I.R.C. Section 199(c)(5)(B) (in upcoming proposed Treasury Regulations) And Follow-up Comments on Online Software Access
(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.
New Jersey General Assembly Bill S. 2628, Sales and Use Tax Modernization Act: Definition of Digital Goods
(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.
SoFTEC's Comments to the President's Panel on Federal Tax Reform
(Acrobat document)
State of Georgia's Proposed Rule: 560-12-2-.111: Computer Software and Computer-Related Services
(Acrobat document)
SoFTEC Letter Regarding Proposed Rule: 560-12-2-.111: Computer Software and Computer-Related Services
(Acrobat document)
Restrictions to the Section 199 Deduction
(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:
Extending the R & D Tax Credit
(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.
HR 1956, Business Activity Tax Simplification Act (BATSA)
(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:
SSTP: Multiple Points of Use Exemptions for Software
(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:
SSTP: Maintenance Contracts
(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:
For information about SoFTEC membership or current initiatives, contact:
Mark Nebergall, SoFTEC President, at (202) 331-9533, or
mnebergall@softwarefinance.org.
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© Copyright 2004, Software Finance and Tax Executives Council
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