Can someone point me to some sites that help you determine tax issues? This is really more for our CPA, as it seems some of the stuff she says, and some stuff I say tend to differ. Without correct information, that could get us in trouble if we went one way or the other.
Typically, the company is an IT company, though we also do hosting, email, T1's to places, etc. So I have to wonder if we charge tax like any brick and mortar company on the hosting? We're the datacenter, the servers sit in our center. Or is there a different set of tax laws for cyberspace such as e-commerce when money is collected online rather than payment sent to office?
So.... I am looking for sites that deal specifically with online American tax. For example (she prob knows this where I wouldnt), do we charge ALL customers tax? Or only those in our same state? Do we have to collect tax for every state, and pay that tax to those states? If we dont charge tax, why? Is it optional? Such things as that...
I told her just charge 6.25% on everything, and just about got my head ripped off..lol.
One thing she stated...
Internet services have a "special" calculation. Effective 10/01/99, per
Tax Code 151.325, the first $25 is exempt from taxes (per time period,
not per bill. You can't send them one bill for $24.95 with no taxes and
another for $5 with no taxes). The remainder is subject to our regular
rate of 6.25%.
As a related item, co-location and web design services are fully
taxable. Do we purchase bandwidth tax free as a sale for resale?
That last one, no, we lease lines, not purchase bandwidth. However, we DO sell bandwith..... so thats another confusion..
Just looking at that is a nightmare. I cant even figure out how we would do that. First $25 with no taxes, but 6.25% or whatever on anything over that within the same billing period? Does the IRS even have the resources to track and check something like that? I'm sure WE still have to pay tax on that initial $25, so why wouldnt we charge it?
Sales tax is on a state by state basis, and you would only charge residents of your state tax, if your state's sales tax statutes define web hosting services at taxable.
For instance, EV1/ThePlanet charge Texas residents sales tax, as they consider hosting as a subset of data processing services in Texas, which is taxable. Since you're in Texas (I'm assuming your company is, as well), the same thing is applicable to your company.
Disclaimer: I'm not a CPA or lawyer. Check your state's tax website for more details.
If you have any confusion, you can call your state department of revenue services and they should be able to resolve the issue. In fact, it probably wouldn't be a bad idea to have a conference call between department of revenue services and your CPA just to clarify the issues.
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