Maryland Sales Tax on Web Design & Computer Services

Help repeal a bill that is currently in the Maryland General Assembly stating that sales tax of 6% must be collected on “computer services” effective July 1, 2008:

Link: Repeal MD Sales Tax on Computer Services

It will ultimately hurt small businesses b/c they are the ones who outsource and thus will pay the tax… large corporations do their design, programming, etc. in house and thus they pay no tax on it, since it involves no transaction.

Its clear this covers “programming” but I’m unclear as to whether or not it includes “web design”. My firm does mostly SEO which I would imagine we can argue (rightfully so) is a marketing service, not a computer service… but we do sometimes do a bit of web design as well… Update: It does include “web design”.

Update:

I had Bill Slawski take a peak at the legislation and he seemed to echo my disappointment with such a law. In my reply to him I wrote:

Thanks for giving that a look Bill. It seems dumb in so many ways. First off, if I raise prices for programming by 6% than I’m that much less competitive versus a firm in another state. Since (unlike physical goods) there is no cost to the consumer to choose a firm in another state, I’m now less likely to make the sale due to price competition factors. Thus, I probably will sell x% less programming projects and thus the state government will make less on my personal income tax returns since I’ll make that much less profit. This seems “penny wise and dollar foolish” to me, especially when you figure that my personal income tax rate is alot higher than the 6% sales tax.

Anyhow, too tired and time-starved to really give this the verbal assault it deserves.

It looks like it does include “web design”.

Until I decide otherwise… I think I may start charging an “SEO Setup Fee” and coincidentally begin offering “Free Web Design & Programming” with every purchase 🙂