Idaho Technology by Jay Larsen: Cloud-computing act: A milestone for technology sector

Jay Larsen. president and founder of the Idaho Technology CouncilApril 23, 2013 

Jay Larsen

The Idaho Technology Council's mission is to foster the growth of technology companies in Idaho. A critical element of that growth is business-friendly policies.

That's why the Idaho Legislature's resounding passage of House Bill 243, the Cloud Computing Clarification Act, is so welcome in the Idaho tech community. The law, supported by Gov. Butch Otter, clarifies that in Idaho, cloud-based services are not taxable transactions.

It has growth implications for our tech employers.

In a relic of tax-policy history, the Idaho Tax Commission previously took a position that software sales were eligible for sales tax. But the policy was adopted more than 20 years ago, when software usually came on a CD that a user would place into a computer hard drive.

It surprised ITC members who operate in the software environment of 2013 - where applications are often licensed for use and accessed through an Internet "cloud" - when the Idaho Tax Commission began pressing this antiquated policy last year.

The issue was brought to our attention by several ITC members, most notably Matt Rissell from TSheets, who was concerned he would have to move his fast-growing company out of Idaho if the policy held.

Rissell wasn't alone. Other members of the ITC said they could not keep doing business in Idaho unless the policy was reversed. That's why the ITC moved aggressively to resolve this issue.

We published a white paper that explained the complexity of this issue and why it was important to support the growth of Idaho's fledgling tech sector.

Through ITC member Hawley Troxell, we drafted legislation that clarified cloud services as nontaxable transactions.

We found legislators - Idaho House Majority Leader Mike Moyle and Sens. Jim Rice and Russ Fulcher - to help us take the first step.

We rallied our members to contact legislators and testify about the importance of the issue. We also met with legislators to help them understand the technology behind cloud computing.

Through our efforts, the bill passed the House and Senate taxation committees.

This accomplishment was possible only because of the unified voice in Idaho's tech industry. ITC had a strong talent pool to draw upon during every step of the legislative process.

Rick Smith, tax attorney and partner at Hawley Troxell, played a critical part in drafting legislation.

Mike Reynoldson, government affairs manager at Micron Technology and ITC public policy chairman, was instrumental in helping us work with policymakers.

Our partnerships with the Boise Metro Chamber of Commerce and the Idaho Department of Commerce - notably department director Jeff Sayer - provided a broad base of stakeholders to rally support for the bill.

Finally, because we had worked with legislators on earlier technology issues, we had relationships with policymakers who understood the importance of supporting Idaho's tech sector.

Through acting as a central voice for tech companies, the ITC influenced policy.

Several cloud-computing companies, such as TSheets, said that without the ITC, they wouldn't have had the support to successfully resolve this issue.

Through the efforts of ITC members, we have created a foundation that will encourage the growth of existing tech companies and open the doors to other businesses interested in making Idaho their home.

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jlarsen@idahotechcouncil.org; 422-9100

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