In yet another thread on why Rackshack charges tax < http://forums.rackshack.net/showthread.php?s=&threadid=29376 > while their competitors do not, the flip-side question comes to mind: if you lease a server from another Texas server provider that does not charge tax, which are numerous, will you the customer be liable at some later date for paying the sales tax plus fines which were not charged to you?

Greetings:

I guess they are going to send some one from Texas to come and collect it?

Thank you.

Originally posted by dynamicnet
Greetings:

I guess they are going to send some one from Texas to come and collect it?

Thank you.

No, but they CAN shut down your server and not release your data until such time that you DO pay the taxes. Tax law is very specific on what they can and cannot do. So, yeah, you can think you are slick by hiding in another country, stae, city, etc., but they can legally shut down your server with NO warning. So keep great backups...and keep the attitude. It'll comfort you if you lose everything.

Originally posted by Iscariot
No, but they CAN shut down your server and not release your data until such time that you DO pay the taxes. Tax law is very specific on what they can and cannot do. So, yeah, you can think you are slick by hiding in another country, stae, city, etc., but they can legally shut down your server with NO warning. So keep great backups...and keep the attitude. It'll comfort you if you lose everything.


I must've missed a part of this thread, because I see noone "thinking they're slick and *hiding* in another country, state, or city" . I believe _your_ attitude is a bit uncalled for and quite rude for no apparent reason.

As far as back-up's go...shouldn't everyone keep them? ;)

Will members stop posting continuous new threads on the exact same subject?

I hear the Search on WHT is pretty good... :)

I hear the Search on WHT is pretty good...
I bet you can't use it yourself to find the definitive answer though ;)

I tried it just now, entered "Texas tax" (without the quotes) and then got simply a form (the same search form back) to enter it again, and then the results were:
vBulletin Message
Sorry! The administrator has specified that you can only do one search every 20 seconds.
Doesn't shead much light on the issue!

More seriously, I've seen numerous threads in which RackShack says they do have to charge tax and they've checked this many times.

At the same time other hosts such as the planet / server matrix / and american web host (who offered the raq's and other servers I thought about getting) do not charge additional tax.

It just strikes me as very odd that so many servers are skirting the tax laws in texas if they are in fact the way they appear. So is this tax law unenforced at the moment? Or are servers at the many other Texas providers who do not charge the tax in danger of being unplugged at any moment by the Texas state tax guys? Or will all their customers get a bill in the mail for back taxes owed (not that it would be huge, but it could certainly change the economics of going with some of the hosts in Texas that do not charge additional tax compared with Rackshack's prices plus tax if it would include penalties).

Again, if you can find the answer with the forum search, please post the relevant post as I cannot find it.

OK, I didn't see the other thread at http://www.webhostingtalk.com/showthread.php?s=&threadid=173192 which mentions that ServerBeach has a clause in their TOS that requires everyone to pay taxes on the server. So how do you do this exactly? Do you pay monthly or yearly to Texas? And identify the tax payment with your server's IP, etc? Or do 99.9% of the serverbeach customers not bother paying this, and if so what will happen to all those folks? I guess I am developing a little bit of an attitude with this; I don't mind paying fairly if everyone else with a server next to mine is also paying, but I don't want to be the 1 out of 1000 people who is the only one sending in money to Texas.

Texas can't collect taxes for foreign people.
Everyone has to pay taxes in his own country, this is why an American doesn't pay VAT if he buy something in Europe.
Rackshack shouldn't collect taxes from foreigners. The right way to handle this problem is like Servermatrix and Serverbeach do.
Texas CAN'T never ask me to pay taxes because I must pay taxes to Italy only! I don't know how many internation laws could break if Texas ask me to pay taxes... :angry:

But what if they do ask and shut down your server for not paying tax?

Originally posted by bagfull
But what if they do ask and shut down your server for not paying tax?
They do an abuse.
I would start a legal action against who ordered my server to be shut down because he couldn't order it.
They have to keep my server up.
Taxes issues are between consumer and the country, the vendor shouldn't go inside them...

Texas has perfect right to impose and collect taxes on servers located in Texas. If you are foreign and don't locate in Texas, they have no right. However, the minute you rent or lease a server in Texas you are conducting business in Texas. That's no different than if I lease a server in the EU, it will be subject to VAT.

Now, as to other Texas providers not "collecting" taxes. Don't bet on it. I know factually that several of them just roll it into the price of the server. So, with one of those, if you pay $149 per month, you are actually paying $139.77 for the server and $9.23 for the sales tax.

..... and if YOU don't pay your Taxes look behind you ... cause that's where the RANGERS gonna be ... :D

Originally posted by Incognito
That's no different than if I lease a server in the EU, it will be subject to VAT.
Only EU citizens are subject to VAT.
If you lease a server in the EU and you aren't from the EU, you have not to pay VAT. Did you pay it? Sorry, you made a mistake.

Ultimately, what you guys have to realize is that whether you like having to pay taxes or not, if you're a Rackshack customer, you're going to pay them.

Unless Rackshack is lying -- which I don't think they are -- they simply don't have a choice in the matter. If the state law says they must collect taxes on the service, then simply put: they must.

If you were in their shoes, what would you do? Thumb your nose at the government and say, "No, I'm not going to collect taxes!" Hah, they'd come in and shut you down posthaste, then cart your butt to jail to boot.

Ultimately, sitting here and whining about how you're in another state, another continent or another fripping galaxy and shouldn't be subject to the taxes -- well, that's not going to do anything.

It is what it is. Suck it up, accept that if you want to do business with Rackshack, you must pay taxes. If you can't do that, take your business elsewhere.

Originally posted by Ravnos
If you can't do that, take your business elsewhere.
Thank you, this is what I will do. :)

Originally posted by Ravnos
Unless Rackshack is lying -- which I don't think they are -- they simply don't have a choice in the matter. If the state law says they must collect taxes on the service, then simply put: they must.
So, why Serverbeach, ServerMatrix, ThePlanet, etc... don't collect taxes? WHO LIES?

Originally posted by Shazan
So, why Serverbeach, ServerMatrix, ThePlanet, etc... don't collect taxes? WHO LIES? Could it be that RackShack is incorporated in Texas and the others mentioned are not? Just an idea...

Originally posted by Shazan
So, why Serverbeach, ServerMatrix, ThePlanet, etc... don't collect taxes? WHO LIES?

According to ServerBeach and RackSpace, they're only required to collect taxes from Texas residents.
A quote from a part of an email from ServerBeach:
"We only need to charge taxes to Texas residents.
(h) Use tax. If a provider of an Internet access service is not engaged in business in Texas or in a specific local taxing jurisdiction and it not required to collect Texas tax, it is the Texas customer's responsibility to report and pay the state and local use tax directly to this office.
You can also (Google) search for Texas State Sales Tax Law, and find out much information pertaining to the above."

Originally posted by Shazan
So, why Serverbeach, ServerMatrix, ThePlanet, etc... don't collect taxes? WHO LIES?

It may be because Rackshack was targeted by the state tax enforcement agency, and the others haven't been.

Maybe some of the other's have been, and Rackshack is the only one to have received an unfavorable verdict for some reason.

It may be because they collect taxes silently -- it's included in the sale price.

The fact of the matter is, we don't know, and we won't know.

Personally, I suspect it's the first -- it's very possible that Rackshack drew the attention of the state taxing agency and the other's haven't. Based upon the specific businesses, I think Rackshack does a whole lot more business than the rest -- remember, Rackshack is an ev1.net subsidiary, who has POPs in several major Texas cities. So it only makes sense that they'd draw the government's attention first.

Texas also does not have a state income tax, which means that they have to get all their money from sales tax, property tax, etc, etc. As such, they're going to be pretty obnoxious about it. I know people who don't stock certain products to sell because they can't afford the local county "inventory tax", if for some reason they can't unload it before the yearly taxation day.

Ultimately, I don't think ANY of the providers in Texas are lying, I just think that they're behaving the best way they know how. Rackshack has apparently been harassed by the Texas taxing agency and ordered to collect. As such, they do. The other's probably have not, and are complying with the law according to their attorney's interpretations. As such, they don't.

You're sitting here railing at Rackshack about this whole taxation thing, and what you've got to realize is that if the local government says "COLLECT TAXES," you collect taxes. Otherwise, they send in the police and shut down you -- and your customers.

Which would you rather do? Collect a peasly $8-$24/mo in taxes, or go out of business?

I believe ServerMatrix has posted that taxes are included in the cost.

Originally posted by panopticon
I bet you can't use it yourself to find the definitive answer though ;)

The "definitive answer" will be found at your tax attrorney/accountants office.... not WHT. :D :D

Well we decided to get a server at Rackshack and pay the tax. We view the tax as "insurance" against having our server shut down for non-payment of taxes in the economically uncertain future. This isn't really a Texas only issue, alot of states are looking for ways to increase revenue. I once ran afoul of the California tax board, and believe me, they were ruthless in collecting. No excuses, no payment plan, nothing. It was PAY ALL OF IT NOW OR WE'RE COMING IN.

(h) Use tax. If a provider of an Internet access service is not engaged in business in Texas or in a specific local taxing jurisdiction and it not required to collect Texas tax, it is the Texas customer's responsibility to report and pay the state and local use tax directly to this office. This is irrelevant to the issue under discussion. Internet Access only refers to that narrow range-internet access.

The laws, letters, and opinions, released by Texas Department of Revenue have been very clear. Web Hosting is Data Processing and is taxed as such.

It's time everyone gets off this kick. Let the providers in Texas deal with our bad laws. Rest assured we are all audited regularly by the state and I would be shocked if Rackspace, Rackshack or the Planet was not in full compliance.

Originally posted by Incognito


It's time everyone gets off this kick. Let the providers in Texas deal with our bad laws. Rest assured we are all audited regularly by the state and I would be shocked if Rackspace, Rackshack or the Planet was not in full compliance.

Yes, let's everyone get off of it. Keep your questions and thoughts to yourself as it doesn't appear to be welcome anymore.
Everyone praise Rackshack and let them now how wonderful they are and never doubt anything in reference to them. ;)

I don't think that is what Incognito is saying. At least that is not how I read it.

We can all sit here and second guess what these providers do, and how they operate. However, I would think they are doing business the way they are.... based on the advise of lawyers and accountants. That is probably the wisest move. We can like it or not, it won't change anything. I personally have no problem paying the tax charged by Rackshack. I just see it as part of the cost of doing business with that datacenter.
Glenn

What I am talking about is people throughout the world offering interpretations of Texas Sales Tax regulations about which they know virtually nothing. They should just be glad they don't have to deal with those regulations as those of us with Businesses in Texas do. However, the accusations of wrong doing against Rackshack for following the law, the suspicions, the uninformed interpretations don't accomplish anything. I could publish volumes on these laws and their interpretations as well as communications with the Texas Comptrollers Office, the Texas Department of Revenue, Attorneys, and other Accounting Firms. That would add nothing either except more confusion. Rest assured the Sales Tax Auditors in Texas are diligent and aggressive and no large company is going to intentionally fail to abide by the sales tax regulations.

As to the original topic of this thread....it is the responsibility of the seller to collect the appropriate taxes. Use tax is in addition and without getting too deep into it typically applies when you bring items in from other states without paying taxes on them.

I abide by Texas laws. I don't like the new EU VAT rules either. But, I also abide by those.

Rest assured the Sales Tax Auditors in Texas are diligent and aggressive and no large company is going to intentionally fail to abide by the sales tax regulations.
What about smaller companies? You know, someone who has a Texas-based server and uses it to run a hosting company? Someone who doesn't charge their customers a sales tax?

If the state of Texas is so diligent and aggressive as to ignore residency for a $99 a month server, who is to say that next year they won't take the same stance on a $19 a month slice of that server? "Excuse us, Mr. Smith, but you seem to owe us two years worth of back taxes on all those web accounts."

When the law, or the enforcement of a law, doesn't seem to make any sense, everyone should be a little bit worried.

If the state of Texas is so diligent and aggressive as to ignore residency for a $99 a month server, who is to say that next year they won't take the same stance on a $19 a month slice of that server? "Excuse us, Mr. Smith, but you seem to owe us two years worth of back taxes on all those web accounts." The state will take the same aggressive stance. To audit, they start with all businesses with sales tax numbers. Most of those not collecting sales tax probably don't have numbers. Next, the check all Registered businesses. If you aren't registered to do business in Texas and are small they may overlook you, but eventually they will catch you. Furthermore, whether or not they catch you, you are still breaking the law.

That's precisely my point, Incognito. Everyone seems to brushing this issue aside with a "If you don't want to pay the sales tax, go with someone else." But it's just not that simple.

Even if you don't mind paying the sales tax, you NEED to understand the deeper ramifications of this situation. We're not just talking about 8.25 percent of your server cost. If you fail to collect taxes on services Texas later judges to be within their jurisdiction, we're potentially talking about 8.25 percent of ALL YOUR REVENUE. Since they seem to have a rather slippery interpretation of their jurisdiction, I think that's something with which to be concerned. Very concerned.