phTitle Author Amends Job Killer Bill; CalChamber Removes Opposition
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phMainContent  (January 23, 2012) A bill that would have imposed a hidden tax on software has been amended in response to opponents’ concerns and therefore is no longer on the California Chamber of Commerce-opposed “job killer” list.
AB 832 (Ammiano; D-San Francisco) would have made it virtually impossible for the software’s owner to show that embedded software is eligible for a property tax exemption.
The CalChamber will be working with the state Board of Equalization (BOE) as part of an interested parties process to develop more guidelines for assessors and businesses to use in the valuation of embedded software.
Before the amendments, business groups argued that the regulatory process was more suited to addressing the concerns raised by the county assessors; the amended bill reflects this argument.
Current Law
Under current law, embedded software is exempt from personal property taxes. If embedded software is sold with equipment at a single (bundled) price, however, a county assessor is allowed to presume that the single price includes only taxable property under existing law. A taxpayer may overcome this presumption by providing information that identifies the nontaxable application software and showing its value. Former Problem
Before amendments, AB 832 would have required taxpayers, in order to exclude nontaxable embedded software when purchased in a bundled transaction, to identify the software and to prove its value by “clear and convincing evidence” in order to overcome the presumption that the bundled price represents entirely taxable property. The proposed standard was inconsistent with the current standard applied in software disputes and that applied nearly universally throughout property tax law, i.e., a “preponderance of the evidence” or “more likely than not” standard. Staff Contact: Mira Guertin |