New York's "Nonsensical" Security Services Tax

A recent New York State tax decision is drawing sharp criticism for its potential to undermine cybersecurity efforts, as highlighted by Charles Henderson, Executive Vice President of Cyber Security Services at Coalfire. In his commentary, Henderson argues that the state's ruling to subject security services to both state and local sales tax is a "short-sighted decision" that punishes companies for investing in crucial cybersecurity measures at a time of escalating threats.

Henderson explains that the New York State Department of Taxation and Finance has determined that services like network security monitoring and professional advisory services are taxable if the protected property is within the state. He draws a parallel to charging first responders tolls, emphasizing the counterproductive nature of financially penalizing organizations for bolstering their defenses. Henderson warns of several negative consequences, including strained security budgets potentially leading to cut corners, disruption for innovative firms (especially smaller ones), and even the possibility of companies relocating or avoiding business in New York State. He urges state officials to reconsider this "poorly thought-out cash grab" and calls on organizations to raise their voices against a tax that treats essential security as a luxury, ultimately making an already challenging cybersecurity landscape even more difficult.