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  1. #1

    Texas Personal Property Tax - What the hell???

    Did anyone else get one of these? I got this bill in the mail from Dallas, Texas for Personal Property Tax on $47,000 worth of "Internet Equipment" they *claim* we own that is located in Dallas, amounting to $1300 in taxes.

    I've already mailed this off to our lawyer for him to investigate, so I can't give you any details about what's on it, but I'm at a total loss to explain this.

    First off, my company is located in Massachusetts, not in Texas. In fact, I've never even *been* in Texas. And we own no equipment there. None whatsoever.

    The *only* thing I can think of is that for about 5 months last year we *rented* a server from RackShack for ~$110 a month. We used it for a backup radius server, never did anything with it, and closed the account in November. But at no time did we ever own the server - and any server that RackShack would be leasing for $110 a month could not possibly have a value of $47,000!

    My lawyer has already assured me that they have no taxing jurisdiction over me whatsoever, but it has me perplexed and confused (I can't even figure out where the City of Dallas would have gotten my name and address!)

    Did anyone else get one of these? Are you as stupified as I am? Anyone track down what the real deal is here?

    - Jason

  2. #2
    Join Date
    Jun 2002
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    Texas
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    Jason

    I have lived in Texas (no where near Dallas) all my life and never have seen this kind of thing. (I think Dallas is having a budget short fall maybe its a creative way to raise money )

    I also have several servers with RackShack for the past couple of years and again nothing, nor should I get anything like that.

    That is strange, would love to hear what you find out about that or what the City of Dallas is thinking!

  3. #3
    Join Date
    Jul 2002
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    1,441
    Maybe its a scam.... IMHO
    Synergy Blue LLC
    SonataWeb.net | SynergyBlue.com
    USA should so something about: http://www.brillig.com/debt_clock/

  4. #4
    yep seems like a scam. Contact the FBI and the government offices in Texas and report this.
    Hockey is Life

  5. #5
    Join Date
    Jul 2002
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    Austin, TX
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    Good call on sending it to your lawyer, also do what infinity said =)
    HostGator.com - A worldwide leader in Shared, Reseller, VPS and Dedicated Server Hosting.

  6. #6
    Join Date
    Mar 2000
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    731
    Wow, that's pretty freaky.

    Love lawyers.

  7. #7
    Join Date
    Nov 2001
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    The South
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    I'd love to know how this turns out, smells like scam if so it'd be a favor to us all to keep us up to date (and if it ain't a scam I think it'd be an even BIGGER favor to let us know how it turns out!).

    Definitely freaky.
    Gary Harris - the artist formerly known as Dixiesys
    resident grumpy redneck

  8. #8
    Join Date
    Oct 2002
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    Lubbock, TX
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    Was it from a government agency, such as the City of Dallas or the Texas State Comptrollers Office? I have lived in Texas my whole life as well and never heard of that. If it didn't come from an official source it's probably a scam, but you were right to send it to the lawyer. If it does turn out to be a scam, be sure to report it to not only the Texas Comptrollers Office but also the Texas Attorney Generals Office as well.

    You pay sales tax here when you buy something, taxes when you register your vehicle, and property taxes, but I never heard of a personal property tax. Heck we don't even have a state income tax.
    David / DrylineHosting.com
    Blowing You Away with Service and Reliability!

  9. #9
    I'll do my best to keep everyone up-to-date. The thing looked very official, but that doesn't mean much (I could whip up just as official-looking a form in about half an hour in Microsoft Word, after all). It might have been a scam - that thought never crossed my mind (the only thought that really crossed my mind was "what the hell are they putting in the water in Texas???")

    You folks that live down there - do you know if you have some sort of appeals or review board on taxes? Because part of this bill was a form to fill out to appeal the determination, and it explained that a hearing would be scheduled sometime in March if I chose to appeal it. Does that sound legit, or...?

    It really did look like the real thing. Can't remember the agency's name that was on it, but it didn't sound too suspicious. The only thing that seemed odd to me was that the thing kept saying "Remember, the Texas whatchamacallit board (as I said, I don't remember the name of it) is charged with collecting and administering tax bills, but does not set or enforce the tax rates or valuations. Rates and valuations are set by the taxing authority in the municipality where the taxes are due." (I'm paraphrasing that, of course, since I don't have the bill in front of me). That seemed a little strange, at least to me, since here in Massachusetts each municipality sends out their own tax bills. But that could certainly work differently in Texas.

    I'll let you know when we learn something new.

    - Jason

  10. #10
    Jason: i'm sure you're fully aware of the Domain scams that went on and the deceiving letters from Verisign. This is very similar.

    Also, there are FBI web sites devoted to notifying people of the most recent scams. Take a search on google for that.
    Hockey is Life

  11. #11
    Join Date
    Jan 2003
    Location
    Houston, Texas
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    26
    As David from Dryline Hosting mentioned, this is not a Texas related tax. I also live in Texas and have never heard of this.

    This is a scam...

  12. #12
    Join Date
    Oct 2002
    Location
    Lubbock, TX
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    30
    Almost any official document I have ever seen in Texas will have an official government agency letterhead (whether it be municiple, county, or state) with addresses and phone numbers on it. I do know that some municipalities in Texas will use an outside collection agency out of Austin for collection of delinquent property taxes, but only after they have given up trying to collect it themselves, which stands to reason you would have received other notices before now if that were the case.

    Here is the address to the Texas Comptroller's Office
    http://www.window.state.tx.us/

    and the City of Dallas site:
    http://www.dallascityhall.com/

    As I said, once you find out it really is a scam, don't hesitate to report them to Texas, they will shut them down so fast they won't know what hit them.
    David / DrylineHosting.com
    Blowing You Away with Service and Reliability!

  13. #13
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    Jun 2002
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    houston, tx
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    544
    Editted... Until further research.
    Last edited by intraweb; 01-19-2003 at 09:15 PM.
    Joe - HostingWave.Com / TXINSURANCE.COM
    http://www.hostingwave.com
    SURGEON GENERAL'S WARNING: Smoking Causes Lung Cancer, Heart Disease, Emphysema, And May Complicate Pregnancy.

  14. #14
    Join Date
    Feb 2001
    Location
    Dallas
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    436
    Possibly not a scam. Seems there was court decision made in 2001 followed by a brief exemption period. With the state facing a $9,000,000,000 budget shortfall, you can expect them to actively pursue this source of revenue.

    “The courts have now made it clear that rendition is a clear and enforceable requirement of law,” he added. Unlike homeowners, businesses pay local property taxes on their inventories, furniture and fixtures, machinery, computers, vehicles, and other tangible assets used for the production of income. Personal property renditions, which are confidential by law, provide information that assists the appraisal district in calculating an accurate January 1 market value for a firm’s business personal property assets.
    SOURCE: Harris County Appraisal District (Houston, TX):

    http://www.hcad.org/cgi-bin/News/Dis...asp?news_id=12

    Related info:

    http://www.taxremedy.com/1-512-476-2...on-detail.html

    Here's the state rendition form, but the link above indicates many counties prefer to use their own form:

    http://www.window.state.tx.us/taxinf...rms/50-144.pdf
    Last edited by adland; 01-19-2003 at 09:24 PM.

  15. #15
    Join Date
    Feb 2001
    Location
    Dallas
    Posts
    436
    Grand Jury Returns Enron Broadband Services Indictment
    Alleges Filing False Business Personal Property Rendition
    Monday, December 16, 2002

    HOUSTON-A Harris County Grand Jury today indicted Enron Broadband Services, Inc., on a charge of filing a false business personal property rendition with the Harris County Appraisal District (HCAD) on April 16, 2001.

    The indictment alleges that Enron Broadband Services knowingly made a false entry in a government record, a Class A misdemeanor, when employees of the corporation submitted a rendition to HCAD reporting that on January 1, 2001, a warehouse in the 700 block of North Shepherd contained only furniture and fixtures worth $500.

    According to Assistant District Attorney Lester Blizzard, the warehouse actually contained sophisticated computer switching equipment and other electronic items worth significantly more.

    Under Texas law, owners of tangible personal property used for the production of income are required to annually render that property to the appraisal district for the county in which the property is located.
    http://www.tax.co.harris.tx.us/PressRelease/enron.htm

  16. #16
    Join Date
    Feb 2001
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    Dallas
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    What is a rendition?

    A rendition is a form you may use to report the taxable property you own on January 1 to the appraisal district. The rendition identifies, describes, and gives the location of your taxable property. You also may give your opinion of your property's value on the rendition form, but it isn't required. Business owners must report a rendition of their personal property. Other property owners may submit a rendition, if they choose.

    If the total taxable value of your personal property is less than $500 in any one taxing unit, then the property is exempt in that taxing unit. See New Business/Going Out of Business.

    Advantages.

    If you file a rendition, you are in a better position to exercise your rights as a taxpayer.

    Your correct mailing address is on record so taxing units will send your tax bills to the right address.

    Your opinion of your property's value is on record with the appraisal district. The chief appraiser must send you a notice of appraised value if the appraiser puts a higher value on your property than the value you listed on your rendition.

    Deadline.

    File your rendition with the appraisal district after January 1 and no later than April 15. The chief appraiser may extend the deadline to April 30 if you can show good cause for needing an extension.

    Requirements.

    If you own tangible personal property that is used to produce income, you must report this property on a rendition form every year. Businesses, for instance, must report their inventories, equipment, and machinery on a rendition.

    If your property is appraised by more than one appraisal district, you need to file a rendition in each appraisal district office. This can occur when your property is located in a taxing unit that is also in a neighboring county. If you have questions, contact the appraisal district in your county.

    Renditions and any income and expense information that you file about your property are kept confidential by the appraisal district. Persons who are not the property owner, the owner's employee, or the owner's affiliated entity must file notarized renditions.




    http://www.window.state.tx.us/taxinf...295/value.html
    Last edited by adland; 01-19-2003 at 11:31 PM.

  17. #17
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    Feb 2001
    Location
    Dallas
    Posts
    436
    BTW, Jason. I would expect RackShack would be responsible for paying the taxes. They're the ones who actually own the servers, make money off of them, and write the depreciation off on their taxes. But I'm no tax expert by any means.

  18. #18
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    Oct 2002
    Location
    Lubbock, TX
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    30
    Wow! Some interesting and informative reading you posted adland. Sounds like something that is being done at the local level though, and in the bigger city/counties, like Houston, Dallas, etc. I am starting to dislike Texas more and more as they find more and more ways to dip into your pocketbook! I agree though, if you were only leasing the property and didn't aquire ownership, even if it was a legit letter you got, I can't see as how you would be responsible for it. Definitely sounds like a good lawyer is the way to go!

    Makes me wonder where all those millions and millions of lottery money they take in goes for, since it doesn't seem to be going for the schools and such they hyped on for so long to get the lottery legal here.
    David / DrylineHosting.com
    Blowing You Away with Service and Reliability!

  19. #19
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    Nov 2002
    Location
    Dallas, TX
    Posts
    12

    Taxes - Texas

    Personal Property Tax is not specific to Texas. In every state where we operate a colocation facility we are taxed on personal property. We specifically exclude the equipment owned by our clients from our tax bill; however, the states have not asked us to reveal who has "colocated" equipment in out facilities so that they might tax them instead.

    When we started selling colocation and local access services in 1999 we were not required to collect sales tax, universal service fees, TIF fees, and sixteen other various fees on any of our services. Today we must collect ALL of these taxes/fees on behalf of the various states where we are located. Interestingly, half of our competitors only collect sales tax - skipping the more complex USF and TIF fees. Has anyone heard of a colocation company getting busted for failure to pay them?
    Alexander Muse

  20. #20
    Join Date
    Oct 2002
    Location
    Lubbock, TX
    Posts
    30
    I know for hosting and design services I have to charge sales tax if the person resides in Texas, but not outside the state. Oddly enough, the first 10% is exempt from sales tax though. Texas sales tax laws are a very confusing mess to navigate. I got that information by telling them what I was doing and flat out asking what I needed to collect tax on. It also varies depending what county you are in, anywhere from about 7% on up to over 8.25%. It gets further complicated if say, for instance, I buy a computer I use for the business, but also use for personal use as only a percentage of it is sales taxable. Which means I have to buy it tax exempt and them pay the percentage of the equipment to the state directly.

    You wouldn't believe all the various city, county and state taxes that are tacked on to my cell phone bill here in Texas.

    Also, if you owe Texas any money the interest rates they charge are outrageous. For instance, I know some that owe back child support and the interest rate is about 90% of the owed amount, compounded monthly. If any business tried that the State would shut them down quick.
    David / DrylineHosting.com
    Blowing You Away with Service and Reliability!

  21. #21
    Join Date
    Nov 2002
    Location
    Fairbanks, Alaska
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    708
    Okay.. my thoughts - it's a scam.

    You DO pay taxes on your server's when you rent them from rackshack.... it's a sales tax, that's it.

    Personal property tax would fall onto rackshack - it's THEIR property. Not yours. A landlord doesn't make a renter pay land taxes because they don't own it. They rent it.

    However, if you were colocating, you would pay taxes on it because you own it, but you don't. You rented. You have absolutely zero personal property in Texas.

    If there is such a tax, and rackshack is passing the bill unto you, I'm sure that is illegal because they own it. They pay the taxes on it.

    And you SURE AS HELL didn't own $47,000 worth of equipment amounting to a tax bill of $1300... Rackshack does. Rackshack owns the equipment, and rackshack pays the taxes on it.

    I'd post this in the RS forums as well just to let that world know what is going on.

    However.. I'm very sure it's most likely a scam. But let your lawyer decide that.
    www.neo-tech.us

    - Computer Sales/Repair/Networking
    - Web Design/Web Hosting

  22. #22
    Join Date
    Dec 2001
    Location
    Houston, Texas
    Posts
    549
    Originally posted by Dryline
    I know for hosting and design services I have to charge sales tax if the person resides in Texas, but not outside the state. Oddly enough, the first 10% is exempt from sales tax though. Texas sales tax laws are a very confusing mess to navigate. I got that information by telling them what I was doing and flat out asking what I needed to collect tax on. It also varies depending what county you are in, anywhere from about 7% on up to over 8.25%. It gets further complicated if say, for instance, I buy a computer I use for the business, but also use for personal use as only a percentage of it is sales taxable. Which means I have to buy it tax exempt and them pay the percentage of the equipment to the state directly.

    You wouldn't believe all the various city, county and state taxes that are tacked on to my cell phone bill here in Texas.

    Also, if you owe Texas any money the interest rates they charge are outrageous. For instance, I know some that owe back child support and the interest rate is about 90% of the owed amount, compounded monthly. If any business tried that the State would shut them down quick.
    This is incorrect. You have to collect sales tax on all hosting (in state and out) as it's considered a data processing service -- and is exempt 20%. See here for more details.
    Modest Mouse Talk

  23. #23
    Originally posted by adland
    Harris County Appraisal District (Houston, TX):
    That's them. That's who sent me this thing. The something-or-other County Appraisal District (whichever county Dallas is in - might in fact simply be Dallas County Appraisal District).

    The problem here is that *you* all know I don't own that equipment and don't owe any taxes, and *I* know I don't own that equipment and don't owe any taxes, but the city of Dallas seems to think I own the equipment and owe the taxes, and as far as I could figure out from reading the notice was that the only way to challenge it would be to go and attend a hearing in Dallas - which would cost me more than just paying the tax bill!

    Quite a sceme they got running down there! Sheesh.

    Anyway, it's in the hands of my lawyer. I have confidence that he'll solve the problem.

    Jason

  24. #24
    Join Date
    Oct 2002
    Location
    Lubbock, TX
    Posts
    30
    Originally posted by vipe


    This is incorrect. You have to collect sales tax on all hosting (in state and out) as it's considered a data processing service -- and is exempt 20%. See here for more details.
    You are right in the respect it is 20%. That was a typo on my part. That 1 key is aweful close to the 2 key.

    However, you do not charge Texas Sales Tax to out of state customers.

    From the Texas Administrative Code for Data Processing Services:
    http://info.sos.state.tx.us/pub/plsq...=1&ch=3&rl=330

    Section 3e
    e) Service benefit location. If both the data processing service provider and the customer are located in Texas, Texas tax is due.

    Section 3f1-2
    (f) Service benefit location--multi-state customer.

    (1) To the extent a data processing service is used to support a separate, identifiable segment of a customer's business (other than general administration or operation of the business) the service is presumed to be used at the location where that part of the business is conducted.

    (2) If that part of the business is conducted at locations both within and outside the state, the service is not taxable to the extent it is used outside Texas. A multi-state customer may use any reasonable method for allocation which is supported by business records.
    David / DrylineHosting.com
    Blowing You Away with Service and Reliability!

  25. #25
    Join Date
    Oct 2002
    Location
    Lubbock, TX
    Posts
    30
    Originally posted by Jason Ellis


    That's them. That's who sent me this thing. The something-or-other County Appraisal District (whichever county Dallas is in - might in fact simply be Dallas County Appraisal District).

    Anyway, it's in the hands of my lawyer. I have confidence that he'll solve the problem.

    Jason
    Yep, Dallas is in Dallas County. Good thing you got a lawyer too. Sounds like DCAD got some bad information, and when Texas gets bad information in it's files it practically takes an act of congress to get it changed. Good luck!
    David / DrylineHosting.com
    Blowing You Away with Service and Reliability!

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