Sales Tax In Host Computer State

Recently, Yahoo announced that Texas was considering a bill that would require vendors with online businesses hosted in Texas to collect and remit state sales tax for sales within Texas (whether the business had a physical presence there or not.) This is noteworthy as all of the Yahoo store servers are located in Texas. As cash-strapped as virtually every U.S. state is, if this bill passes then I predict a flood of states piling on.

This concerns me a lot. Most ecommerce vendors have enough trouble collecting and submitting sales tax on sales into their own state. Having to do this for another state (or several more, if you use servers in several states) would be rough. If they are like Florida, where each county has it's own tax rate and these taxes have to be calculated individually and remitted collectively, it ain't gonna be pretty.

Any thoughts? We have have 8 different ecommerce websites spread across multiple servers and systems here in the USA. However, we're thinking about moving offshore. Being pretty patriotic, I hate to send money/business outside the US, but it seems like our hand is being forced.

What about U.S. possessions,like the Virgin islands? If theres hosting companies there its not sending money overseas.

i dont think the bill has to do with the hosted server but you having an office in that state or city. I live in Austin texas, I charge sales tax for order in texas and then city tax for orders in austin. I also have a building that i own and work out of in Indiana which we have to charge the Indiana state tax and then if anyone orders from the city our building is in then i charge tax for that.

Talking to our CPA and lawyer what Texas and many other states are trying to do is set a flat tax for online orders. Doesnt matter where your business is if a customer from texas orders they pay a sales tax and then you as a vendor have to pay the tax.

Its not really all that hard to keep track of. But IMO the bill will never pass. If it does pass for some odd reason i would say with will be taken out within 2 years. as the state will end up having more expenses going out trying to track all the vendors down for money.

Then on the flip side they will also piss off any person living in that state that wants to buy something online and end up having to pay more.

This has been going on for a few years about passing this law. I dont think it will go anywhere anytime soon.

I have not seen this particular bill but most of the ones that have been passed already are targeting affiliates. They are saying having affiliates is a "presence" in the state and that means the company needs to start collecting the sales tax. Instead of collecting the sales tax the companies just cancel any and all affiliate accounts from that state so not only does the state not get the sales tax but any affiliates from that state lose all their income.

Now if the Texas bill really is targeting hosting as a presence then you will see those servers get moved somewhere else. So again no real tax benefit, just another job/income killing law. I know I have a dedicated and a couple of vps's in Texas and if they made this law I would just move the sites elsewhere.


Your govt at work.....

There is no federal sales or use tax in the united states. 45 states impose sales and use taxes on the retail sale, lease and rental of many goods, as well as some services. Sales and use tax is calculated by multiplying the purchase price by the applicable tax rate. Tax rates vary widely by jurisdiction and range from less than 1% to over 10%. Sales tax is collected by the seller at the time of sale. Use tax is self assessed by a buyer who has not paid sales tax on a taxable purchase.