Liberal and Loving It

Leading by example

A statement I heard as a kid has always stuck with me - "making rules is easy, following them is hard." In the case of the use tax the state is now putting a major emphasis on collecting this tax. Sounds simple and reasonable - no?

So I just shot an email to all of our elected leaders (state executive & legislative elected members; Boulder City & County elected members) asking if they paid their use taxes over the last 3 years. Letter follows:

Hi;

With the recently passed legislation, you have put a major emphasis on increasing sales tax revenue. And a significant part of that is the attempt to collect the use taxes we all owe for internet purchases where no sales tax was charged.

As you are well aware, the use tax requirement has been in place for years (decades?). All that's new is improving the enforcement mechanism. But we all should have been paying this tax even before this new legislation.

In the spirit of showing leadership by example, I request that each of you tell me if you filed your use tax statement and paid the taxes due for 2007, 2008, & 2009. And if you have not paid the taxes - why.

As our elected leaders who create and enforce the law, I think leading by example on this issue is very important. Because if you cannot be bothered to pay your use taxes, then why should you expect it of anyone else?

Thanks - dave

I will update as I get answers. But if they don't file (I'm guessing that will be the answer of most), then how can they expect the rest of us to do so?

Responses (Yes means filed):

State Executives
gov	Bill	Ritter	D
ag	John	Suthers	R
treas	Cary	Kennedy	D
sos	Bernie	Buescher	D
State House
1	Jeanne	Labuda	D
2	Mark	Ferrandino	D
3	Daniel	Kagan	D
4	K.Jerry	Frangas	D
5	Joel	Judd	D
6	Lois	Court	D
7	Terrance	Carroll	D
8	Beth	McCann	D	NO	intends to do so
9	Joe	Miklosi	D
10	Dickey lee	Hullinghorst	D
11	Jack	Pommer	D
12	Paul	Weissmann	D
13	Claire	Levy	D	NO	only learned this year that they are taxable
14	Kent	Lambert	R
15	Mark	Waller	R
16	Larry	Liston	R
17	Dennis	Apuan	D
18	Michael	Merrifield	D
19	Marsha	Looper	R
20	Amy	Stephens	R
21	Bob	Gardner	R
22	Kenneth	Summers	R
23	Max	Tyler	D
24	Sue	Schafer	D
25	Cheri	Gerou	R
26	Andy	Kerr	D
27	Sara	Gagliardi	D
28	James	Kerr	R
29	Debbie	Benefield	D
30	Kevin	Priola	R
31	Judy	Solano	D
32	Edward	Casso	D
33	Dianne	Primavera	D
34	John	Soper	D
35	Cherylin	Peniston	D	N/A	does not order online
36	Su	Ryden	D
37	Spencer	Swalm	R
38	Joe	Rice	D
39	David	Balmer	R
40	Cindy	Acree	R
41	Nancy	Todd	D
42	Karen	Middleton	D
43	Frank	McNulty	R
44	Mike	May	R
45	Carole	Murray	R	NO
46	Sal	Pace	D
47	Buffie	McFadyen	D
48	Glenn	Vaad	R
49	BJ	Nikkel	R
50	Jim	Riesberg	D
51	Brian	DelGrosso	R
52	John	Kefalas	D
53	Randy	Fischer	D
54	Steve	King	R
55	Laura	Bradford	R
56	Christine	Scanlan	D
57	Randy	Baumgardner	R
58	Scott	Tipton	R
59	Ellen	Roberts	R
60	Thomas	Massey	R
61	Kathleen	Curry	D
62	Edward	Vigil	D
63	Cory	Gardner	R
64	Wesley	McKinley	D	N/A	does not order online
65	Jerry	Sonnenberg	R
State Senate
1	Greg	Brophy	R	NO
2	Kenneth	Kester	R	N/A	does not order online
3	Abel	Tapia	D
4	Mark	Scheffel	R
5	Gail	Schwartz	D
6	Bruce	Whitehead	D
7	Josh	Penry	R	NO
8	Al	White	R	N/A	does not order online
9	David	Schultheis	R
10	Bill	Cadman	R
11	John	Morse	D
12	Keith	King	R	N/A	does not order online
13	Scott	Renfroe	R
14	Bob	Bacon	D	N/A	only online purchase is airline tickets
15	Kevin	Lundberg	R
16	Dan	Gibbs	D
17	Brandon	Shaffer	D
18	Rollie	Heath	D	N/A	his vendor charges him sales tax
19	Evie	Hudak	D
20	Mo	Keller	D
21	Betty	Boyd	D	N/A	does not order online
22	Mike	Kopp	R
23	Shawn	Mitchell	R
24	Lois	Tochtrop	D	N/A	does not order online
25	Mary	Hodge	D
26	Linda	Newell	D
27	Nancy	Spence	R
28	Suzanne	Williams	D
29	Morgan	Carroll	D
30	Ted	Harvey	R
31	Pat	Steadman	D
32	Chris	Romer	D
33	Michael	Johnston	D
34	Paula	Sandoval	D	N/A	does not order online
35	Joyce	Foster	D
Boulder County
comm.	Cindy	Domenico	D
cor.	Thomas	Faure	D
da	Stan	Garnett	D	NO/YES	no on personal, yes on business
clerk	Hillary	Hall	D
comm	Ben	Pearlman	D
shrf	Joe	Pelle	D
ass.	Jerry	Roberts	D
comm.	Will	Toor	D	N/A	thinks all online purchases charged tax
City of Boulder
	Suzy	Ageton		NO
	Matt	Appelbaum
	KC	Becker		NO	will comply going forward
	Macon	Cowles
	Crystal	Gray
	George	Karakehian
	Lisa	Morzel		N/A	all online purchases are local
	Susan	Osborne
	Ken	Wilson
mgr	Jane	Brautigam		N/A	only online purchase was from a local store

Censorship alive & well in Boulder

from the Boulder Daily Camera

A Boulder city councilwoman said Monday she thinks the city violated the First Amendment rights of a longtime critic by cutting him off while he was speaking during public comment at last week's council meeting and then having him arrested when he protested.

But wait, there's more:

Morzel and other city officials are also troubled that someone, apparently a council member, scratched on a microphone while Brigham was speaking. The noise could be heard washing out Brigham's voice both in the council chambers and on Boulder Channel 8, which broadcast the meeting live.
...
Some council members agreed that the leaders also need to have a discussion about who has the authority to direct city police to remove someone from a council meeting.

The council earlier this year agreed that the mayor should manage its meetings. But some council members said newcomer Karakehian was the one who motioned for the officer to intervene.

So one council member anonymously disrupted Seth's speech and "no one" asked the police to remove him. Gee, that's transparent government.

Look people, free speech is not about protecting speech you find agreeable - that needs no protection. Free speech is about protecting speech you find abhorrent. If you are unwilling to hear people tell you you're an idiot - resign. Because that's part of the job of an elected official.

And to the one(s) that scratched the mic, told Seth to change the subject, and/or told the police to remove him - you screwed up. And you need to apologize - to Seth. (A real apology, not a Diggs Brown sort-of/not really mumble.) And the Council should offer Seth 10 minutes of presentation time and give him their undivided attention.

Maybe the Republicans are right.

I want to believe we Democrats do a better job running the government. I want to believe the government, while imperfect like the rest of us, does a good job delivering services. But then I get this.

I sent an email in to DoR asking for guidance on how we need to apply the sales & use tax. (In other words, asking what we should pay - something you would hope the state has a strong interest in.)

I emailed both the State and the City of Boulder. I got a reply from the City the next day telling me who is working it and it would be a couple of days. No answer from the state. So I sent a follow up asking if they received my email and got the following reply:

From: TaxpayerService [mailto:[email protected]]
Sent: Wed 2/17/2010 4:00 PM
To: David Thielen
Subject: Sales Tax Question

Dear David,

Your questions would need to be written in to the Department of Revenue in Letter form to our Business Tax Accounting Section!

The Address is:

Colorado Department of Revenue
Attn:  BTAS
1375 Sherman St
Denver,  CO  80261

Nick

Why on earth do they require a written request? Is it so they then have to type it in to their system thereby guaranteeing a job for the individual who enters the requests?

Now granted, this is not a big deal. people are not starving, a child did not die, we're not losing millions. But it does speak to the pervasive inefficiencies that appear to exist throughout the state administration.

Fellow Democrats - we're in a world of hurt both economically, and for us as a party politically. We don't fool anyone when we say that the government runs efficiently (at least not anyone who's been to the driver's license office). We (and by we I mean the Ritter Administration) needs to step up and resolve these problems.

Our argument that we Dems do a better job running the government requires that we do a good job running the government.

Evil Sith Overlords Republican brethren - yes you have a point that the government could be run better. But you can address this in a responsible manner that still gives you political advantage. Don't use it to paint government as unnecessary but instead use it to discuss how the state can provide it's needed services more efficiently.

And to state employees, many of you will respond that the state bureaucracy is implacable and yes it's a mess - but nothing can be done. That's not acceptable. Things can be improved but a key component is for you each individually to step up and push for change.

This ongoing litany of problems is embarrassing. We should all be doing a better job. And we should grant that the Repubs in the legislature have a valid point when they decry the inefficiencies in our state government. (OW! that last sentence hurt!)

Sales tax on software - oncoming train wreck

First off, I think we should bring in most tax revenues through a progressive income tax and limit sales tax to cases where we want to reduce consumption (cigarette taxes) or the tax goes to direct use of the good (gasoline tax). Second, if we are going to have sales taxes (and we are), then I don't think anyone should get a free ride – so I support the concept of taxing software sales.

With that said, this impacts me personally as my company sells software. I'm not concerned with adding a tax to the sale as our customers are not price sensitive. What I am concerned with is the hassle as I don't want to have to have employees spend a ton of time administering this, and I don't want to force out customers to spend a lot of time telling us where they are using the software we sell them. We are all very hassle sensitive.

Under the proposed software sales tax, can the state tell me how to tax the sale? The following are all real cases that my company has seen, either selling or buying software.

1. In the car (as a passenger) I buy a program for my iPhone. I make the purchase in Boulder but by the time it's downloaded we are in Denver. And I first use it South of Denver on our way to Colorado Springs. Which City/County gets the sales tax?
2. My company purchased a site license to a program used to create our documentation. It is used by 2 employees, one in Boulder and one in New Hampshire. Both downloaded a copy. Neither knows which one used it first. And at the time of purchase they would not have been able to predict who would use it first. Note that we did not buy 2 copies – we bought a single site license. Which state gets the sales tax.
3. We are an IBM partner. One option we have is to pay $795.00/year and we then get all IBM software for free. One year we never used any software – was that still a sale as it was never installed & run on a computer in Colorado? In this case would we pay the sales tax the first time we actually get a free copy – and in that case only if the first use was in Colorado?
4. We sell to customers in Colorado where at the time of sale they do not know where the software will first be installed. In the case of one 65K sales I asked and they think it was installed first in Colorado on a virtual machine, but then shipped to China to run on servers there. So it was never run in Colorado. Is it where first installed or first run?
5. We sell floating developer licenses. We have a customer where they have some developers here in Colorado and the rest in China. Sometimes all the licenses are used by developers in Colorado, sometimes all in China, and usually it's about 2/3 China and 1/3 here. And at the time of purchase they have no way of knowing who will use it first.
6. Potential customers download our software, install it, and try it. When they decide to purchase we then ship them a new license key to replace the demo key. So upon purchase they are not downloading or installing any software, just a key. Is that a software sale?
7. We have a customer that has a large presence in Boulder. We sold to a group in New Jersey, to be used in Poland, and paid for out of Chicago. But the Boulder facility may (they aren't sure) use the system with our software, but probably running on servers in New Jersey.
8. We have customers who put our software on Amazon's cloud system. They don't know what state the software first runs on, not does Amazon. A customer in England could have our software first running in Colorado while one in Colorado may never have it running here.
9. We have customers pay us to add specific functionality to our program. So it's professional services in that they are paying us to do something specific. But the end results is that we ship them a new version of our commercial product as the feature is added to the commercial product. Is that a software sale or professional services?
10. We sell annual support & updates to our customers. This is a combined deal where they get both for the price. As the updates is the new version of the commercial software, is that taxable? And if so, what percentage of the support & updates as the support part is not software?
11. If a customer downloads our software from a server in Asia, does it count as a sale from Colorado?
12. We use SalesForce for our salespeople. Their software runs on servers in California and we access it via our web browsers. As the software does not get installed here, do we owe Colorado taxes on that purchase? What if they use JavaScript in their web pages so that it then does run code in our browser from their server?
13. If I buy commercially available web page templates, is that software? It's html which are page layout commands but it is not a program that runs.
14. There are electronic books with embedded flash in them – is that software?
15. Multiple Kindle books can be tied to the same account so all members of a family can read a book purchased once. If my daughter in Chicago gets a Kindle we'll tie her to our account. If I buy a book that she reads first – which state gets the sales tax? What if I buy it for her?

Before making this law, you need to have clear answers for the above. We have sales prices on the order of 50K – 250K so the Department of Revenue is going to want any money due to it. But if the above questions do not have a clear answer, we will be left waiting in most (not some – most) cases to have DoR determine what is owed to who.

The other thing is I see this creating a barrier to closing a sale – and that will harm us (and other Colorado companies). If we tell a potential customer they need to break out their purchase and identify which components will first be used in Colorado and where – that's the kind of requirement that will always slow a sale. And will sometimes lose one. (Needless to say, if we lose a 250K deal, that's one less person we hire.)

On top of that, we have to determine what taxing districts within the state a given sale falls in. How do we determine if a Boulder address is within the city limits? In addition, this guarantees we will not open a sales office in DTC (something we have considered) because the last thing we need is a second jurisdiction we have to figure out local taxes for.

Keep in mind we're a small company. There are literally thousands of others like us here in Colorado. We are all coming out of the recession and trying to focus all of our time and effort and growing our companies (and that adds jobs). You need to give as a simple straightforward way to determine the correct sales tax.

And to double down on this clusterfuck, there is the proposal to require companies in other states to report to Colorado based on sales. Can Colorado even tell them the criteria to determine what is included? (I bought a book on my Kindle when I was in Arizona, read it in Arizona, and deleted it when done – still in Arizona. The book was never on my system in Colorado. How can Amazon track that?) Senator Brophy has a good post on this – including the little issue of the state learning what you are buying (that inflatable sheep was a gag gift – I swear!).

I understand the need to increase revenues. I agree that it is fair for software companies to pay their fair share. But software is not buying a physical thing at a physical location. It is the purchase of an amorphous object that can then first be used in multiple locations.

The legislature needs to get this figured out before dumping it on us. Otherwise it will cost Colorado companies sales (and jobs).