Flutterby™! : Tennessee is a Technology Blackhole

Tennessee is a Technology Blackhole

2005-12-26 00:54:52.301773+00 by meuon 11 comments

Background: Carl Hartley was COL's lawyer in similiar fights regarding TN Sales Tax for internet services, software development services, and such. I heard these noises from the State of TN several years ago. Today, it makes a Slashdot Article which references the Chattanoga Time Free Press with This Article: "A state board is proposing a sweeping change to make computer software used in business subject to property taxes.."

What they were trying to do years ago, was actually assess the value like property. ie: So what if you paid $500 for a web site, and it's tied to a LOT of revenue for your business, they may assess that it's value is much higher, and tax you on an appraised value.

Wonder where GeekLabs should move to?

[ related topics: Interactive Drama Politics Software Engineering Law Net Culture ]

comments in ascending chronological order (reverse):

#Comment Re: made: 2005-12-26 02:02:41.238744+00 by: aiworks

It doesn't look like this has legs (just like the Federal commissions that recommend tax changes). However, this is, too an extent, a problem with the way that businesses account for software internally. Large corporations (like UPC, quoted in the article) treat software as an assest that must be depreciated (just like property). For a public company, these is desirable since a $1.5 million software purchase might just show up as $215,000 in depreciation (even though the company laid out $1.5 million in real money) on the balance sheet. If you don't want it taxed like property, stop treating it like property.

Also, this might make software exempt from use tax that all corporations pay on software regardless of whether it is collected as sales tax by the software seller.

#Comment Re: made: 2005-12-26 02:05:03.060919+00 by: aiworks

2 more things to consider: 1. This would be good for software as service since there's no purchase of assest happening. 2. This could be very good for open source software for the same reason.

#Comment Re: made: 2005-12-26 02:53:46.073455+00 by: mkelley

This would be even more reason for the outlying Georgia counties, near Chattanooga, to start courting business.

#Comment Re: made: 2005-12-26 03:28:01.312557+00 by: meuon

Open Source helps the fight but as usual the article skims things from an odd angle. Having been involved as one of the Plaintiffs in a 500K claim by TN Sales Tax people, what they were looking at doing was appraising the value of the software. So it works like this: I wrote 'CybrMall' and the 50 variants of it out there. It makes me a little value added hosting revenue, but it's woefully undermarketed and underpolished. But if an intellectual property appraiser says it's worth something ranging from what I have in it at $100/hr, to 'market value' I could be looking at an "asset" they value at thousands to millions, and then have to pay taxes on it. and in reality, it's probably worth very little.

You (aiworks) offer "software as a service" - what is that developed code base worth?

I'm working on an accounting and point of sale program that is about the best thing I have EVER written by a large margin. What is that code worth? a: What I am getting paid for it, maybe. b: potential market value.

#Comment Re: made: 2005-12-26 06:05:33.796196+00 by: aiworks

Actually, the only software I've got is in support of other true services (where there's labor and knowledge and contacts, etc...).

And, what a wonderful thing to have an appraiser come in and value your software at a large dollar amount; that would do fantastic things for selling your IP or courting new clients. Of course, that won't happen. It reminds of how Hamilton county, Tennessee assessments or Georgia car assessments work: it's illogically small.

Again, this doesn't have legs. There are too many corps (espcially insurance corps) in Tennessee that really do have millions of dollars over decades spent on systems that could be properly appraised at BIG dollars. This doesn't have legs; I suspect this is more about creating a splash or making an income tax not look so bad (it seems most things in TN tax law are about that).

#Comment Re: made: 2005-12-26 15:58:04.128468+00 by: ebradway

What really bites for meuon and this was the real issue at COL is that it doesn't matter if the tax law has legs. All the state has to do is to decide to enforce the law for GeekLabs until GeekLabs manages to pay whatever sum the state decides or GeekLabs goes under. For a small corp like GeekLabs, this kind of thing is a nightmare. And I'm pretty certain Mike doesn't need a high tax appraisal to help sell his IP and court new clients. Generally, Mike works AGAINST that kind of thinking (which makes me wonder why Mike is writing an accounting system...).

#Comment Re: made: 2005-12-26 16:26:26.894428+00 by: meuon [edit history]

$100 per productive hour.. and they are nice people with a real need to be addressed. And.. I get to keep "recycle rights". Honestly, the nice people with a real business was the most interesting part.

Eric's point is valid. I've talked to many small companies that just 'rolled over' and paid the taxes and fines because the fight would put them out of business. I know a couple from COL days and currently that got involved in these fights and went bankrupt and moved out of state. If they hit me with $10k or $20k, I -could- pay it, but it's blood from my soul, not pocket change.. if they get ridiculous like they did with COL, it could be hundreds of thousands. I know Deb won that after I left, but I also know COL got lucky riding on Prodigy's coat-tails and it cost thousands, maybe 10's of thousands in legal/lawyer fees.

Eric is also right: I'm not about raising an IP portfolio, although I've been told my current working code-base is pretty decent, it's also powered a hamster in a wheel: me.

Eric just made the news regarding his GIS/Kite Mapping/Visualization/Photography project.. Worth potentionally millions.. ;)

#Comment Re: made: 2005-12-26 21:54:39.341573+00 by: ebradway [edit history]

Chattanooga Times Free Press 24 december 2005, p7 (Metro/Region B1)

UTC staffer develops aerial mapping system By Dorie Turner Staff Writer

Eric Wolf calls himself an evangelist, and though he spent this week pounding the pavement of the UTC campus, he's not pushing religion.

Mr. Wolf, who runs the University of Tennessee at Chattanooga's Geographic Information Systems programs, is using a balloon to take aerial pictures of the campus to develop an updated school map.

The project is part of his master's thesis, but he said he is working to develop an affordable aerial photography system that groups strapped for cash can use to take their own pictures.

"My ultimate goal is to put together a system that is easy to use and inexpensive to purchase for groups like environmental groups," Mr. Wolf said. "The whole system costs what it costs to fly in an airplane once."

The $600 system includes a digital camera, a metal brace, a heavy-duty balloon and a device that activates the camera's shutter remotely. The balloon flies about 500 feet above the ground, taking pictures from different angles.

Mr. Wolf describes himself as UTC's GIS evangelist and is listed in the campus phone directory that way. He said he put the system together using some grants and his own money.

He said once he has taken enough pictures of campus, he will load the photographs into his GIS software, which will compose a map based on the images and global positioning data. He hopes to use the UTC map to create a mapping program for the campus, Mr. Wolf said.

"I'd like to create a campus map where you can go to an interactive kiosk and say, 'I want to go here,' and it'll tell you how to get there," he said.

UTC's environmental sciences and archaeology departments have expressed interest in the system, as well, to help with classroom instruction and research, he said.

Red Bank resident Keith Harper, who is self-employed, is helping Mr. Wolf with the project. The technology can be used by wedding photographers, Realtors and lawn-care companies, he said.

"I'm interested in the business applications this could bring," Mr. Harper said.

E-mail Dorie Turner at dturner@timesfreepress.com

Staff Photo by Jacqui Janetzko: Keith Harper, left, helps Eric Wolf, geographic information science staff member, take a digital camera off a balloon to change batteries in a field by the Challenger Center at the University of Tennessee at Chattanooga.

#Comment Re: made: 2005-12-26 22:06:02.246853+00 by: ebradway

And here's a picture of the photographer as she snapped the shot from the paper!

#Comment Re: made: 2005-12-28 15:44:34.395022+00 by: flushy

Mike, move it to Florida! :)

#Comment Re: made: 2005-12-28 23:40:47.109651+00 by: meuon

Tempting.. Tempting.. I'm jonesing right now for a road trip to Florida.