Subject: Re: The term "intellectual property" considered useful
From: "David H. Lynch Jr" <>
Date: Fri, 12 May 2006 03:17:49 -0400

Michael Upchurch wrote:
> Twenty years ago the Tennessee Supreme Court ruled that the software became
> tangible when the instructions were typed into a computer.  The case
> specifically concerned the application of sales tax to the process of
> fabrication of custom software.  Recently renewed efforts to have all
> software treated as "real property" for assessment of property taxes failed
> after a bitter fight.
    I believe that Lawyers have a saying that "Hard Cases make bad law"
    Tax cases make worse law.
    There is very little that courts and legislatures will not do to
increase revenue without "raising" taxes.

    If typing it into a computer makes the intangible tangible then
there is no such thing as intangible.

    Sales taxes are particularly obnoxious in this respect. I believe in
Pennsylvania,  retail computer software is taxable.
    Hardware is taxable, software or consulting services sold
concurrently with hardware is taxable, but software or consulting sold
alone and not at retail are not taxable.
    In a different area, architectural and engineering services - not
fundamentally different from software development are intangible, and
not taxed, but drawing reproduction expenses are taxable - except where
they are done in house in which case they are not.

    In a significant number of instances whether a service is taxable
depends on exactly how it is billed or packaged, not what the service is.

    I do not believe that PA has found software to be property, but I
have little doubt they would if they thought they could get more money.

    In defense of lawyers, you have to make some kind of logical sense
out of what courts and legislatures have done - despite the fact that it
need not actually have a thread of logic.
    I am fortunately not constrained to conform my opinions to reflect
the illogic of the existing system.


Dave Lynch 					  	    DLA Systems
Software Development:  				         Embedded Linux
fax: 1.253.369.9244 			           Cell: 1.717.587.7774
Over 25 years' experience in platforms, languages, and technologies too numerous to

"Any intelligent fool can make things bigger and more complex... It takes a touch of
genius - and a lot of courage to move in the opposite direction."
Albert Einstein