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Thread: Tax

  1. #1

    Tax

    Hello,

    We currently have equipment in a data center in Texas but we are getting charged tax even though we are from Canada. Here is there response regarding the tax:

    "Per the Texas State Comptroller's office, if your company has equipment in Texas you are deemed to have a presence in Texas and we are required to charge Texas sales tax. If you are exempt and have a permit showing your exemption,please forward it to me and I can remove the sales tax from future invoices."

    Is this accurate ? I am guessing it is but I just wanted to confirm.

  2. #2
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    Quote Originally Posted by XFactorServers View Post
    Hello,

    We currently have equipment in a data center in Texas but we are getting charged tax even though we are from Canada. Here is there response regarding the tax:

    "Per the Texas State Comptroller's office, if your company has equipment in Texas you are deemed to have a presence in Texas and we are required to charge Texas sales tax. If you are exempt and have a permit showing your exemption,please forward it to me and I can remove the sales tax from future invoices."

    Is this accurate ? I am guessing it is but I just wanted to confirm.

    It is, it's long been a "problem" albeit a small one with doing operations in Texas. There was a big stink years and years ago when rackshack(ev1) started charging sales tax on their dedicated servers.

  3. #3
    Is it only if the company operates in Texas ? So lets say a company is from New York but they offer services in Texas do they still need to charge sales tax in Texas ?

  4. #4

  5. #5
    Join Date
    Oct 2009
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    I think it is accurate because if it is the law in texas you should obey it..

  6. #6
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    Aug 2008
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    Obviously there could be several variables that may or may not be at play here. But judging from your thread it sounds as if you own the equipment and are not leasing/buying over time the equipment in question. That being said , Taxes in Texas on equipment should not be charged on a monthly basis or even at all to the client from the Data Center. We, a Texas Data Center, are simply required to pass along contact information and proof of occupancy to the state comptroller and then they contact the client to determine property tax amount on an annual basis.

    To be clear though this is only concerning property tax, not sales tax.

  7. #7
    Quote Originally Posted by CoreXchange View Post
    Obviously there could be several variables that may or may not be at play here. But judging from your thread it sounds as if you own the equipment and are not leasing/buying over time the equipment in question. That being said , Taxes in Texas on equipment should not be charged on a monthly basis or even at all to the client from the Data Center. We, a Texas Data Center, are simply required to pass along contact information and proof of occupancy to the state comptroller and then they contact the client to determine property tax amount on an annual basis.

    To be clear though this is only concerning property tax, not sales tax.
    Yes the equipment is owned and we are getting charged the sales tax every month included in our power/bandwidth costs.

  8. #8
    Remember that the amount of the property tax bill is an estimate since they don't know what equipment you have. Providers are only required to pass on the tenant information, not an equipment list. In the past they have just estimated that any business interest in Dallas has $50k worth of assets. If you dont, protest the amount of equipment you have and pay accordingly.

    To avoid sales tax on some services you need to have a resale certificate stating that you are reselling the services. It is a common form.
    Looking for next opportunity

  9. #9
    Just run from them if you can (if contract allows you).
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  10. #10
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    This could be a very bad precedent, anyone in Texas retain attorneys?

    You would not want this, to like 'get out' of Texas. EEK!
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  11. #11
    Quote Originally Posted by tulix View Post
    Just run from them if you can (if contract allows you).
    Do you have any source to this ? (also under contract so that isn't an option and I like where I am anyhow)

  12. #12
    Join Date
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    This topic has come up a few times in the past. Texas charges a tax on the value of equipment that you have located in Texas, even if your company is not based there. Just make sure that you're paying based on the actual value.

    As far as sales tax, that's another topic. This tax is not a sales tax.
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  13. #13
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    Quote Originally Posted by bqinternet View Post
    As far as sales tax, that's another topic. This tax is not a sales tax.
    No, the original poster of this topic specifically asked about sales tax. to quote from the original post "...are required to charge Texas sales tax."
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  14. #14
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    Quote Originally Posted by bqinternet View Post
    Texas charges a tax on the value of equipment that you have located in Texas, even if your company is not based there. Just make sure that you're paying based on the actual value.
    We had a server with the planet a few years ago and they tried to make us pay taxes for "property in Texas". Not sure how a server rental makes us having equipment there as the equipment wasn't ours and we weren't co-locating.

  15. #15
    There is a difference between dedicated servers and colocation. In my opinion, the dedicated server provider is taxed and that is part of their cost of doing business, just as I am taxed for the value of my generators, routers, office equipment, etc. You would be surprised how many providers have actually started pushing their tax liability off on their customers. I have seen it with 2 well known providers and their response was "Well this provider does it too." Now imagine what percent of their customers just pay it and dont question it. People have always seen extra charges on their phone bills like Universal Service Fees and fees for Touch Tone Service and just accept it. Those little fees are 100% margin.

    Every municipality and state has different ways to collect tax revenues. Some have toll roads, high sales tax, property taxes, franchise fees, etc that they charge. Very few companies, or individuals, find that they can move from Texas to another state and lower their costs of doing business. Yes, you may be able to get out of paying a business property tax, but there are other costs.

    I personally wish I didnt have to pay as much property tax as I do on my house, but I am thankful that I don't have to pay any state income tax.
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  16. #16

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