Cloud Services Clarification Act Decisively Approved by Idaho Legislators

House Bill 243, the Cloud Services Clarification Act, championed by Idaho Commerce and Idaho Technology Council

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Idaho policymakers understand the importance of fostering our state’s tech industry. The passage of House Bill 243 sends a strong message to the national and international business communities that Idaho is open for business

BOISE, Idaho (PRWEB) April 10, 2013

House Bill 243, the Cloud Services Clarification Act, was decisively approved by Idaho legislators and was signed into law by Governor Otter yesterday. A critical piece of legislation for Idaho’s technology community, the approval of House Bill 243 has far reaching implications for Idaho’s tech industry.

Idaho government leaders asserted that the passage of House Bill 243 would support the growth of existing technology companies and build Idaho’s reputation as a business friendly state. “Idaho policymakers understand the importance of fostering our state’s tech industry. The passage of House Bill 243 sends a strong message to the national and international business communities that Idaho is open for business,” said Governor C.L. “Butch” Otter.

House Bill 243 clarifies that Idaho cloud based services are not taxable transactions. This legislation was drafted by members of the Idaho Technology Council (ITC) in response to last October’s ruling by the Idaho Tax Commission, which stated that cloud based services were subject to taxation. The taxation of cloud services has been an issue many states are grappling with and Idaho’s decision about taxing cloud services attracted national attention from publications like the Wall Street Journal.

As services are not taxable in Idaho, ITC members asserted that exempting cloud based services was a ruling consistent with existing Idaho Tax Code. Members of the Idaho Technology Council were also concerned that taxing cloud based services would severely harm the growth of Idaho’s budding technology sector. Because the Idaho Tax Commission audits more Idaho companies compared to companies selling cloud based services in Idaho, it placed Idaho tech companies at an inherent disadvantage. ITC members testified to legislators that the tax on cloud based services would harm Idaho’s economy by making it difficult to start new Idaho tech companies and by encouraging existing tech companies to relocate to other states.

“If you do things that increase the tax rate and difficulty of doing business for a tech business, they can move employees somewhere else, hire somewhere else, they can grow somewhere else and not grow here in the state of Idaho,” said Michael Boren, COO of Clearwater Analytics, which provides investment portfolio reporting and analytics.

Throughout the legislative process, members of the ITC asserted that the cost of losing cloud computing businesses in Idaho would be greater than the revenue that could be gained from such a policy. “Idaho tech companies employ numerous people in high-wage positions and the economic impact cannot be understated. Idaho policymakers made a smart decision to consistently apply state tax policy for services provided by Cloud Computing businesses,” said Rich Stuppy, Vice President of product strategy at Kount, which provides protection services from online fraud.

Representative Mike Moyle, Senator Jim Rice, and Senator Russ Fulcher sponsored House Bill 243 as it passed through the House and Senate. Widespread support was generated from the private sector and key stakeholders, including the Boise Metro Chamber of Commerce and the Idaho Commerce. Throughout the legislative process, House Bill 243 was strongly supported by Idaho lawmakers. It passed the House and Senate Taxation Committees unanimously, passed the House by a 65-2 vote, and passed the Idaho Senate unanimously with a 34 – 0 vote.

"The legislature acted responsively and responsibly. They worked hard to understand the complexity of the issue, with both the tax implications and the technology in question," says Matt Rissell, CEO of Tsheets. "In the end, it's a win-win all the way around. It will ultimately open the doors to other businesses making Idaho their home.”

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ABOUT THE IDAHO TECHNOLOGY COUNCIL (http://www.idahotechcouncil.org) The Idaho Technology Council’s mission is to foster the development of technology companies in Idaho, primarily in the areas of information technology, agriscience, and energy. The ITC provides a valuable forum for industry, research, educators, investors and government throughout the state. The ITC represents all aspects of technology – from research to commercialization to capitalization and talent recruitment. The integration of high technology into all aspects of the economy means that the ITC will remain entirely member-driven to deliver objective expertise broadly applicable to Idaho policy-makers. Members gain access to industry-shaping discussions and information geared to enacting results. ITC conducts regular events, including peer-to-peer forums, CEO roundtables, and opportunities to meet with civic leaders and nationally-recognized analysts. In addition, members participate in the ITC’s planning process on a multi-year road map to drive measurable results in areas such as attracting talent, increasing available funding from government and private investors, and developing and protecting intellectual property.


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