The Department of Revenue has produced new guidelines about the application of the software services tax.
These are draft guidelines which are still subject to change. The important idea in the new interpretation, which is an idea that I had been pushing, is that the tax should apply to modifications of pre-written software only when the pre-written software was itself taxable. The main example of that is open source software which is available for free and is the foundation of many websites. For example, this website uses Apache for web connection, MySQL for the text database, PHP for page creation, WordPress to organize the content environment, and assorted Word Press plugins — all of which are open source products which are free. So, the change makes clear that much website development will continue to be tax-exempt.
There are plenty of ragged edges remaining in the tax. For example, it is common to purchase WordPress themes (to control look and feel) and then modify them, so that a web design project could become taxable. And regardless, the fundamental error of singling out a very competitive and portable industry for taxation is undiminished. The tax should still be repealed, but DOR deserves credit for trying to make the best of a bad situation.