Web Hosting Talk : Web Hosting Main Forums : Dedicated Server : RackShack Sales Tax

[Crash]

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."

[cbaker17]

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

[eva2000]

i get charged the sales tax on my raq with rackshack.net and i'm in Oz !

[Fred]

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?

[Chicken]

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?

[LLT]

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??

[teck]

I would say to call them up and ask. I hope they aren't just keeping the money.

[JeremyL]

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

[The Realist]

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

[The Realist]

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

[LLT]

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.

[LLT]

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*

[Honu]

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 !!!!

[The Realist]

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.

[Crash]

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