Tuesday, October 30, 2007

More on the Service Tax

Matt Harlow of the Perry Ballard agency sent out this email today regarding the service tax and its impact on public relations, advertising, and marketing agencies....

"Confused about Michigan's new sales tax on services? Learn more about how the
tax affects you as a marketer and how you can help to fight it by watching this
online video.

In the meantime, here are a few things you should know:

1) While advertising agencies, media outlets and other marketing oriented
firms are not specifically subject to the tax, certain marketing related
services are, regardless of who provides that service. Some of the services
include:

* Marketing consulting
* Desktop publishing
* Design
* Packaging and labeling

2) It is a use tax, not a sales tax. This means that if either the buyer or
the seller is in Michigan, the transaction will be taxed.

These two facts combine to create three major problems for our industry:

1) All Michigan marketers' budgets are instantly 6% smaller in the
taxed areas.

2) All Michigan agencies and vendors are now 6% less competitive when
offering the taxed services out of state.

3) The ambiguity of what specific services are and aren't taxed is, to
put it bluntly, an audit waiting to happen.

The American Advertising Federation-District Six
has joined the Ax the Tax Coalition with over 50
other professional associations to stop this tax. We are also staying in
touch with the several Michigan lobbyists and the American
Advertising Federation
in Washington. We'll make
every effort to keep you informed and tell you how you can help to defeat
this tax. In the meantime, we urge each of you to join the fight as
actively as possible."

Stay tuned...and share your thoughts by commenting on this blog.

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