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  1. #1
    Join Date
    Aug 2001
    Location
    Portland
    Posts
    38

    Question RackShack Sales Tax

    I was thinking about switching to rackshack but they charge 8.25% sales tax . I live in Oregon, luckily we don't have to pay sales tax... which leads me to the next question I thought there was a moritorium on internet sales tax... aparantly that doesn't apply to state taxes on internet services? I have never paid sales tax on anything I have purchased on the internet before so I was a bit surprised. Can anyone recommend a hosting company with similar services/prices without the sales tax?

    -CP


    "All accounts and services provided by RackShack are subject to the current tax rate as imposed by the City of Houston, State of Texas which is currently 8.25%. 80% of the monthly service charge is subject to the 8.25% tax rate, while the remaining 20% of the monthly service charge is not taxed. 100% of the setup fee is subject to the 8.25% tax rate. The above applies to all accounts and services provided by RackShack."
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  2. #2
    Join Date
    Jun 2000
    Location
    Wichita, Ks, USA
    Posts
    1,984

    sales tax

    They are not allowed to charge sales tax unless they maintain a place of business in the state you live in/work in. So if they have a business office or sometimes even a pop, then you could be required to pay sales tax if they dont then its illigal for them to collect sales tax
    affordablecolo.com carrier grade colocation at a affordable price!
    Charles Baker - Company Operations
    1-866-316-HOST
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  3. #3
    Join Date
    Apr 2000
    Location
    Brisbane, Australia
    Posts
    1,354
    i get charged the sales tax on my raq with rackshack.net and i'm in Oz !
    : CentminMod.com Nginx Menu Installer (Nginx 1.9, PHP-FPM 5.3-5.6 & 7.0-dev, MariaDB 5.5/10 + ngx_pagespeed) for CentOS
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  4. #4
    Join Date
    Aug 2000
    Location
    NY, NY, US
    Posts
    163
    They are not allowed to charge sales tax unless they maintain a place of business in the state you live in/work in.

    That's not correct. Sales tax is determined by the point WHERE the article or service is to ARRIVE. Technically, all these mail order companies and Internet sales are supposed to be taxing, but it's simply a nightmare to keep track of 50 sales taxes, plus some things may not be taxable in some States, it would be a nightmare to take in all those taxes and then turn them over back to the States that collected them, becuase when they collect tax they are to turn them over to the government of each State they collected from.

    I would inform your State Attorney Generals Office. They may be charging tax and just keeping it.

    Give them a call and threaten them, and tell them that AT&T doesnt charge sales tax and ask why they do?
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  5. #5
    Join Date
    Jun 2000
    Location
    Southern California
    Posts
    12,121
    Well, AT&T may be a bad example as they don't have to charge sales tax. You'll notice that your bill is at least $5 higher, even when you don't make a single call that month, due to various fees and taxes they do collect. Don't get me ranting on my phone bill... I don't want to go there!

    edit: unless you meant AT&T hosting... heh?
    HostHideout.com - Where professionals discuss web hosting.

    Chicken
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  6. #6
    Join Date
    Sep 2001
    Posts
    35
    That's one of the reasons I didn't sign up with them. I've done business with several Texas-based companies, and I've never seen any mention of sales tax before.

    I think one of the co-location facilities I was looking into, are based in Texas, and they don't charge sales tax.

    I don't think it's legit, but then again, it is George Bush's home state. lol

    Edit: Maybe someone should ask RackShack for their sales tax ID number??
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  7. #7
    Join Date
    Sep 2000
    Location
    New York/USA
    Posts
    1,690
    I would say to call them up and ask. I hope they aren't just keeping the money.
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  8. #8
    Join Date
    Sep 2000
    Posts
    514
    They are only allowed to charge you sales tax if you live in Texas PERIOD. If they are trying to charge you this and you don't llive in Texas, then the Texas State Auth. need to be informed.

    In Texas, alot of service oriented businesses don't have to charge sales tax, but it looks like RackShack has taked the route they are renting you hardware and not providing a service.

    http://info.sos.state.tx.us/pub/plsql/readtac$ext.TacPage?sl=R&app=9&p_dir=&p_rloc=&p_tloc=&p_ploc=&pg=1&p_tac=&ti=34&pt=1&ch=3&rl=308
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  9. #9
    I have a raq with rackshack and live in the UK, just received this from them:

    Since the raq or virtual site is located in texas is phisicaly sited in texas then sales tax is applicable.

    Is this correct?

    Brian
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  10. #10
    And here is a transcript from them:

    <Brian> Why is rackshack charging me and have charged me 8.25% texas sales tax were I done live in texas?

    <WebSales_Aaron> Brian - Because the company you are purchasing the service from (RackShack) is in Texas and the final location of the service (Colo Facility) is in Texas, according to Texas tax law, texas sales tax applies

    <WebSales_Aaron> That is the word from RackShack management

    <Brian> Yes but only if you live in texas, I live in the UK so sale tax is not applicable to me.

    <WebSales_Aaron> The thing is, since the RAQ or Virtual site you purchase will be physically located in Texas, tax applies. The fact that people are out of state, in thise case, does not apply, because the product remains in texas.

    <Brian-> Can you send me this in an email form.

    <WebSales_Aaron> I can send a transcript of this chat right here. We don't have a set script about this topic. Will that be acceptable. If it is not, you can email askmesurfer@rackshack.net asking for a better, more official explanation

    Thank you,


    So is this correct?

    Brian
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  11. #11
    Join Date
    Sep 2001
    Posts
    35
    I don't know, it doesn't sound right. I know here in Michigan that businesses are exempt from sales tax, if the product they are purchasing is for resale, which I would think applies in this situation.

    I know many if not most other states also use that guideline.
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  12. #12
    Join Date
    Sep 2001
    Posts
    35
    Here's the law, according to Texas. lol

    You just have to love the "big oil & Bush" state.

    Actually, I'm not really sure if this applies to hosting. *shrug*
    Attached Files Attached Files
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  13. #13
    Join Date
    May 2001
    Location
    Maui, HI
    Posts
    1,239
    Aloha

    well here are my thoughts

    if you rent something say a storage locker in another place you would pay tax for that physical location

    they most likley have set it up they get some advantage to writing off something if they set it up this way as a rental and property rental or ???
    who knows most likely a tax lawyer or accountant set it up for them and this is the way they are doing it ??
    I would really doubt they are pocketing the money ???
    but if they are that would not be very smart move ;(
    I should also say I am not saying they are not smart I think they are very smart
    I would and really doubt they are doing this !!!!!!!!

    man they put capone away for taxes when nothing else would work
    to me there are a few thigns you dont mess with
    taxes are one of them !!!!
    Last edited by Honu; 10-03-2001 at 04:27 PM.
    Aloha, Chad
    www.happyfish.com
    To do a move in such a way that no one suspects let alone detects !!!
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  14. #14
    I think these 3 sections would be applicable to the above and I think sales tax is added regardless if you live in texas or not.

    (g) Local taxes.

    (1) For local sales tax purposes, city, county, transit authority, and/or
    special purpose district sales taxes are due if the Internet access service
    provider has only one place of business (the location from which the
    provider accepts orders for Internet service) within the boundaries of a
    local taxing entity. Local sales tax must be collected based upon the tax
    rate at that location, except that no transit authority sales tax is due on
    services provided to a location outside the boundaries of the transit area.
    In the case of multiple locations, if an order for Internet service is taken
    at one location but the service is provided from another location from which
    customers may order service, the place of business from which the service is
    provided will determine to which local taxing entity the tax is allocated.

    (2) For the purposes of the local use tax, if a place of business is outside
    the boundaries of a local taxing entity, the Internet access service
    provider will be required to collect local use tax if the client is within
    the local taxing entity and the service provider has representation in the
    local taxing entity as outlined in sec. 3.286 of this title (relating to
    Seller's and Purchaser's Responsibilities). Even if the service provider is
    not required to collect local use tax, the client is still liable for the
    tax if the service is received or a benefit is derived from the service
    within the boundaries of a local taxing entity.

    (3) An in-state customer purchasing Internet access services for the benefit
    of locations in more than one local taxing entity is responsible for issuing
    to the Internet access service provider an exemption certificate claiming a
    multi-city benefit and for determining the extent of benefit for each
    entity. The local use tax for each entity must be reported, allocated, and
    paid by the customer. An Internet access service provider that accepts in
    good faith an exemption certificate claiming a multi-city benefit is
    relieved of responsibility for collecting and remitting local tax on
    transactions to which the certificate relates.
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  15. #15
    Join Date
    Aug 2001
    Location
    Portland
    Posts
    38

    Question Texas based taxes?

    Does anyone else use a hosting company in Texas that charges sales tax to out of state clients? Maybe another user of a different provider in Texas can shed a little light on this.

    -CP
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  16. #16
    Join Date
    Aug 2001
    Location
    Houston, Texas
    Posts
    695
    The key to Texas law and Internet use taxes relates to where the services are "delivered" or "provided".

    In the case of a Raq, the service is delivered and provided in Houston, Harris County Texas.

    You will notice that part fo the services are taxes at 100% and some at 80%. This relates to the Texas law that was passed repealing some of teh tax on Internet services. The "moratorium" that was referred to earlier was not applicable to all 50 states. Some states, including Texas, that were already charging sales taxes on Internet services, were exempt from the provisions although Texas later exempted SOME Internet services from sales tax collection.

    I hope this clears some of the tax issues up.

    Robert Marsh
    Head Surfer
    Rackshack.net
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  17. #17

    The Realist

    " The Realist " could you please provide where (URL) was it that you found the information listed in your previouse reply?

    Thank you in advance.
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  18. #18

    Re: The Realist

    Regarding the below, it was infact within this very thread, 1st page, 12th post down there is a link called txtax.txt.

    Its within thers M8.

    The Realist


    Originally posted by mr0817
    " The Realist " could you please provide where (URL) was it that you found the information listed in your previouse reply?

    Thank you in advance.
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  19. #19

    rackshack.net experience

    I am considering a rackshack.nte dedicated server, has any one had any experience with this company and their systems that may affect my decision ??
    Thanks in advance
    Ian

    www.thewebsitecompany.co.nz

    <<MOD NOTE:>>
    Please set up a signature (see profile) - Ohhh and welcome!
    <</MOD NOTE>>
    Last edited by Chicken; 10-11-2001 at 08:01 PM.
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  20. #20
    Join Date
    May 2001
    Location
    Maui, HI
    Posts
    1,239

    Re: rackshack.net experience

    Originally posted by iancal
    I am considering a rackshack.nte dedicated server, has any one had any experience with this company and their systems that may affect my decision ??
    Thanks in advance
    Ian

    www.thewebsitecompany.co.nz

    <<MOD NOTE:>>
    Please set up a signature (see profile) - Ohhh and welcome!
    <</MOD NOTE>>
    Aloha
    do a search
    you will find lots or read the raq forum
    yes they are good bang for buck you can not go wrong
    get the one with 2 HD at least
    that is if you are sure you know waht you are doing how many people you will be hosting what kind of stuff you will be hosting etc...
    chances are if you are starting out and want to learn get a raq or start with a reseller account
    Aloha, Chad
    www.happyfish.com
    To do a move in such a way that no one suspects let alone detects !!!
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  21. #21
    Join Date
    Aug 2001
    Location
    Charlotte, NC. USA
    Posts
    93
    I used to have dedicated server from host located in Huston, Texas.
    I used to pay almost $80/month

    And I live in Charlotte, North Carolina

    Even though I didn't like it, I was convinced that they had
    no choice. They had huge headache over tax themselves
    because it was very hard to convince their customers.

    One of their accountant told me that if I can prove that I
    resell the service and charge tax to my customers, plus,
    provide my Tax ID, then, there may be a way not to pay
    tax.

    However, I did not study that route any further because
    I did not sell the service. I was developing the scripts
    on the server.

    If you guys want to research further into this tax thing,
    type in "nexus" and "tax" on search engines

    I am sure there will be plenty info.

    Jonathan
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  22. #22
    Join Date
    Nov 2000
    Location
    Austin, TX
    Posts
    415
    The reason Texas has such a high sales tax is because there is no state income tax. The only reason there is a tax on rackshack's service is because it consists of leasing hardware which is a tangible good, otherwise people offering non-tangible services do not have to charge sales tax.
    Justin Bachus
    BlastHosting, LLC - Professional web hosting at a low price with
    PHP, MySQL, FreeBSD, and more!
    http://www.blasthosting.com
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  23. #23
    Join Date
    Oct 2000
    Location
    Winchester Va
    Posts
    49

    An answer

    Our parent company Visual Link was thinking of offering dialup access in that area we were doing market research into this and have an answer. I have to admit I AM affiliated with cobaltracks and I am just setting a question straight. This guy is VERY helpfull and if anyone has any questions send them in his direction.
    Sam


    >Dear XXXXXXX
    >
    >You work with an out-of-state firm that sells Web hosting services.
    >The firm has a computer data center in Houston, Texas. You ask about
    >the application of Texas state and local tax to services sold by the
    >Houston location.
    >
    >Web hosting falls within the definition of data processing services
    >in Tax Code Section 151.0035 and Rule 3.330. Your firm is engaged in
    >business in Texas by virtue of having a data center located in
    >Houston. Accordingly, your firm is required to collect tax from
    >individuals receiving benefit of your service in Texas regardless of
    >the location of the server on which their Web page is located.
    >Please refer to Subsections (e) and (f) of the enclosed Rule 3.330
    >for information regarding service benefit location. I should also
    >point out that 20 percent of the value of data processing services is
    >exempt from Texas state and local tax.
    >
    >The entire text of the Tax Code, a complete set of rules, and a
    >wealth of other information are available at
    >http://www.window.state.tx.us/taxinfo/salestax.html through our
    >website.
    >
    >This opinion is rendered based on the information you provided.
    >Other facts, though similar, may yield different results.
    >
    >You may reach me toll-free at 1-800-531-5441, ext. 3-4680. The
    >direct line is (512) 463-4680. You may also write to Tax Policy,
    >Comptroller of Public Accounts.
    >
    >Sincerely,
    >
    >Al Van Allen
    >Tax Policy Division
    >
    >Enclosures Rule 3.330
    > Local Tax Bulletin
    >
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  24. #24
    Join Date
    Aug 2001
    Location
    Houston, Texas
    Posts
    695
    This all goes back to "WHERE" a service is provided, and this is where the issue gets sticky.

    We have recently undergone a serious audit by the State Controllers office and so we have a little experience in this area.

    If there is any question, it has to be settled in the State's favor or you rick paying the tax you should have collected out of yoru pocket.

    Robert Marsh
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  25. #25
    Join Date
    Oct 2000
    Location
    Winchester Va
    Posts
    49
    Agreed,
    When in doubt ask the goverment... (Sound's dangerous doesn't it :-) ). I am provideing contact information for this.

    al.van.allen@cpa.state.tx.us
    http://www.window.state.tx.us/taxinfo/salestax.html
    1-800-531-5441, ext. 3-4680

    We have some outsourced dialup pops in texas and I'm trying to
    figure out if I have to charge my ISDN customers there taxes :-(....
    It doesn't look good.

    They are very helpful and can give an offical answer.
    Sam
      0 Not allowed!

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