Steam-powered

August 20, 2019 5:23 PM

Every year, Massachusetts offers residents a weekend free of sales tax. During this year's tax holiday, one man bought a game on Steam, but was was surprised to discover that he had been charged sales tax on the transaction anyway. He inquired with customer service as to why. They replied dutifully, citing Massachusetts General Law regarding the decision.

It seems municipally-provided utilities, including but not limited to electricity, gas, and Steam, are exempt from the tax holiday. The Massachusetts Department of Revenue would like a word

posted by Mayor West (33 comments total)

That’s pretty fucking funny. Although I suspect the Massachusetts DOR will laugh last, since according to the regulation, Steam was indeed required to not charge sales tax.
posted by Autumnheart at 5:30 PM on August 20, 2019 [3 favorites]

I am delighted to have gotten a "first time poster" email alert and find that it's...Mayor West who has been here for fifteen years. Congrats!
posted by cortex at 5:44 PM on August 20, 2019 [89 favorites]

When I asked cortex what a first time poster email alert looks he sent me this link.
posted by glonous keming at 6:00 PM on August 20, 2019 [15 favorites]

This has been the mother of long cons, to direct eyeballs to my website, the Massachusetts Department of Revenue. We're a post-punk cover band; come see us play Fashion Week!
posted by Mayor West at 6:03 PM on August 20, 2019 [103 favorites]

Maybe it makes me a terrible person but I kind of hope that this somehow ends up going absurdly high up in the court system (maybe a class action by everybody that got charged sales tax?), so Very Serious Judges are forced to issue Very Serious Rulings citing case law and legal precedent to show that the law that says "Steam" did not, in fact, mean that kind of Steam. I will laugh the whole time.
posted by mstokes650 at 6:05 PM on August 20, 2019 [16 favorites]

This is honestly glorious and I am 90% sure there's a lawyer inside Valve who knows about this and doesn't want to test it in court so is taking the conservative path.
posted by GuyZero at 6:06 PM on August 20, 2019 [4 favorites]

For whatever reason this reminds me of the Oxford comma case.
posted by any portmanteau in a storm at 6:11 PM on August 20, 2019 [4 favorites]

Oh man, the reply (you know which one*) to the tweet. Who the hell are these people and where do they come from?

*For those who don't want to click:
when I have an issue with Amazon, they reply in PUBLIC. they don't hide and try to save face like you just did.

the difference? Amazon has to EARN their money. all you do is demand it from people and throw them in jail if they don't comply.
posted by Literaryhero at 6:13 PM on August 20, 2019 [1 favorite]

It's possible that Steam legitimately falls under the exemption for telecom services.

The state seems to define telecommunications service as “any transmission of messages or information by electronic or similar means, between or among points by wire, cable, fiber optics, laser, microwave, radio, satellite or similar facilities but not including cable television.”

It would probably take a court to decide whether you're paying Steam to transmit you the game or paying for the game data itself. I don't know how you would deal with games that include online components, since you're presumably paying for some message transmission as well as some software.
posted by smelendez at 6:20 PM on August 20, 2019 [4 favorites]

I’m an accountant and I just finished a degree in legal studies and I love every single thing about this. Thank you for making my day.
posted by armeowda at 6:28 PM on August 20, 2019 [10 favorites]

You're paying for license to use the game, not for the data transmission. Steam's a drm storefront that also provides downloads. If you had the game data already, Steam would okay the use, and if you delete it, Steam doesn't charge again to redownload. Steam also requires you to have ISP access to the internet already, to use it.

No telecom here.
posted by kafziel at 6:28 PM on August 20, 2019 [5 favorites]

Mass. General Laws, Part I, Title IX, Chapter 64H, Section 6A, Paragraph (c), First Sentence, Clause (iv):

any excise erroneously or improperly collected by a vendor shall be remitted to the department of revenue;
posted by save alive nothing that breatheth at 6:38 PM on August 20, 2019

"steam" is in the middle of a sentence and uncapitalized in that link provided; I wonder where along the way that list got turned into a bullet point with each member capitalized.
posted by Earthtopus at 6:42 PM on August 20, 2019 [2 favorites]

Steam is either being too cute by half or completely ignorant of the fact that Massachusetts in fact has at least one utility company that generates actual steam for sale to customers and that the DoR rule refers to that heated water vapor, not some penny-ante game platform. You can see one of that company's plants after getting off a train at South Station; and the other if you take the Red Line from Boston into Cambridge. There's a third steam plant towering over the Longwood Medical Area (but that's owned by a consortium of non-profit facilities in the medial area, so I don't know if taxes would apply there).
posted by adamg at 6:52 PM on August 20, 2019 [4 favorites]

Speaking as a Massachusetts lawyer (but not your Massachusetts lawyer, so stop calling me, Valve): (a) this is amazing and hilarious; (b) at the risk of ruining the joke, there is zero chance that any legal folks at Valve actually think that "steam" might possibly refer to the Valve service.

The statute in question excludes "gas, steam [note the lower case], [and] electricity" from the sales tax holiday. Even if the capitalization is different on the website FAQ, and that's somehow confusing, it's something you'd then go look up -- you wouldn't just say "OK cool we probably got called out specifically on a Massachusetts government website, let's not check."

And in general it would be pretty wild for a statute or regulation to call out a particular private company like this -- Valve is a big service, but they're not Ma Bell. It's like if Mass. declared a sales tax holiday that explicitly excluded Walmart but not Target -- that would set off all kinds of alarm bells for all kinds of people long before it went into effect, and then it would not go into effect, except none of that would ever happen in the first place. It's not exactly a bill of attainder, but intuitively it's not government-y enough to be anyone's first reading of the text.
posted by john hadron collider at 7:02 PM on August 20, 2019 [4 favorites]

Yeah, there's obviously no possible chance a lawyer for Valve could credibly argue they might reasonably think it applied to them.

But they still charged sales tax.

It's not really a joke, at that point, Valve collected probably hundreds if not thousands of dollars in sales tax this weekend which they were not supposed to charge.
posted by kafziel at 7:21 PM on August 20, 2019 [8 favorites]

As a resident of an ancient building that each winter (far too early in the fall and too late in the spring) provides free never-ending, scalding hot, window steaming, dragon hissing, paint blistering steam heat, I wonder if this means I can get free video games?
posted by This_Will_Be_Good at 7:27 PM on August 20, 2019 [9 favorites]

It's not really a joke, at that point, Valve collected probably hundreds if not thousands of dollars in sales tax this weekend which they were not supposed to charge.

There are plenty of reasons to make Valve out to be the bad guy in all kinds of situations, but this isn't one of them. Valve didn't do this as some greedy money-grab; anything they collected would have to be remitted to the state. They don't get to keep it! It looks like they just screwed up. Sales tax is hard, mmkay?
posted by The Bellman at 7:31 PM on August 20, 2019 [6 favorites]

It's not that they "just screwed up," it's that someone at Valve responded to this person by pointing to the state law as a defense of their actions.
posted by one for the books at 7:43 PM on August 20, 2019 [6 favorites]

someone at Valve responded to this person by pointing to the state law as a defense of their actions.

Someone absolutely knew this was going to come up - that page didn't get pulled up at random when that one guy asked. Right or wrong, this was the actual plan.

STEAM
posted by GuyZero at 8:38 PM on August 20, 2019 [4 favorites]

So you CAN get burned by steam.
posted by The Underpants Monster at 8:50 PM on August 20, 2019 [5 favorites]

Valve didn't do this as some greedy money-grab; anything they collected would have to be remitted to the state.

Sales tax is always remitted to the state. The point is, they grabbed it from people who shouldn't have had to pay it.

That sounds like the sales tax holiday is entirely optional for vendors - they can continue to collect tax as long as they hand it over just like regular taxes. The buyer who got screwed out of their tax money doesn't get a refund; they were just forced to pay a tax the law doesn't require them to pay.
posted by ErisLordFreedom at 9:02 PM on August 20, 2019 [1 favorite]

Sales tax is hard, mmkay?

Definitely. It's all special cases and no guiding principles.
posted by hypnogogue at 9:08 PM on August 20, 2019 [3 favorites]

Oh shit, that was a mistake. Now someone's going to go through every law and regulation for the generation and delivery of steam and apply them to Steam.
posted by ctmf at 11:08 PM on August 20, 2019 [2 favorites]

I wonder if this means I can get free video games?

Pssst, hey buddy, what you need what you need?
posted by Meatbomb at 11:08 PM on August 20, 2019 [1 favorite]

Oh shit, that was a mistake.

Soooo, Valve, turns out in New York,

In addition to overseeing operations of electric, gas, and water utilities to ensure safe and adequate service at fair and reasonable rates, the Office of Electric, Gas and Water has responsibility for utility steam generators (production), steam production planning, and steam rates, charges, rules and regulations.

posted by ctmf at 11:13 PM on August 20, 2019 [4 favorites]

Someone absolutely knew this was going to come up - that page didn't get pulled up at random when that one guy asked.

It sounds like "that one guy" sent them the website page, not that Valve had it ahead of time.
posted by eviemath at 4:28 AM on August 21, 2019

Except it would be unlikely that they DID pass it on to the state as the state would not expect any tax payments for that day. That would have been pocketed as pure profit.
In my opinion it was a complete rip off.
posted by Burn_IT at 7:22 AM on August 21, 2019

I mean, maybe, but I don't think Steam is organized enough to set up exception days where 364 days of the year they pay a state and then 1 day of the year they pay themselves. For what, a few grand, maybe?
posted by graventy at 8:29 AM on August 21, 2019 [2 favorites]

I mean, that was basically their argument in Australia. And some other places. "It's too hard (read: not sufficiently profitable) to comply with the law and give people refunds, if we start doing that other people who we aren't legally obligated to provide this service to might want it too!" isn't terribly compelling to me, anymore.

If they don't want to set up compliance, they're entirely welcome to opt out of doing business in that jurisdiction.
posted by CrystalDave at 10:34 AM on August 21, 2019 [1 favorite]

Consumers save more from Seam sales than they do from a random tax-free weekend and the tax-free weekend has significant compliance costs. It's really not that great an offer in this age of poorly-but-completely-automated order processing systems.
posted by GuyZero at 10:40 AM on August 21, 2019

I mean, maybe, but I don't think Steam is organized enough to set up exception days where 364 days of the year they pay a state and then 1 day of the year they pay themselves. For what, a few grand, maybe?

If it's too hard to comply with tax law, it's too hard to do business.

It's not too hard to comply with tax law.
posted by kafziel at 5:13 PM on August 21, 2019

Complying with sales tax law is in fact an entirely too difficult process if you try to do it yourself. There are far too many state-specific rules and carve outs that make it a damn nightmare.

However, that is why the Streamlined Sales Tax system exists. For the price of voluntarily collecting sales tax on behalf of every participating state, you get to use a standard set of rules, and if you so choose, outsource the calculation and paperwork to a third party at no cost to you since they are paid a commission by the state. If you sell a wide variety of things it can still be a pain to correctly classify all your products and services, but you have to do that anyway if you are complying with your home jurisdiction's rules.

The wonderful thing about the outsourcing method is that they do all the calculation, including tax holiday exemptions, and take on any liability for miscalculating the applicable rate such that your only responsibility is to refund inappropriately collected tax to your customers when you learn of the mistake.

Point being, I'm not surprised or even particularly bothered by Valve failing to notice a sales tax holiday in one state. The not-a-system we have in this country ensures that mistakes will happen no matter what level of care is taken. What they do now is what matters to my perception. If they spork their customers and don't pay the state, that will be upsetting.
posted by wierdo at 9:58 PM on August 21, 2019 [3 favorites]