HostGator.com charging tax...

[dmyre]

I just received an email informing me of tax changes for my Hosting account:

It has recently come to our attention that HostGator is required to be collecting an 8.25% sales tax from all of our Texas-based customers. Our records indicate that your account billing information is based in Texas.This came to our attention after we received a letter from the Texas Comptroller of Public Accounts notifying us that we are being audited. After doing research on the issue and running a few numbers, we were forced to pay close to $500,000 dollars in back taxes on our Texas-based customers.

The good news:This was our fault for not collecting taxes from day one so we will only be collecting the 8.25% tax going forward. This means you've had a pretty nice discount up until now, not having to pay the tax.

The bad news:Starting in 30 days we will be adding a 8.25% sales tax to all of our customers based in Texas, including your account.

I really wish HostGator could afford to pay this tax on behalf of our Texas clients going forward, but unfortunately, with shared hosting having such low margins, this would result in many of our packages becoming unprofitable. I know this may sound greedy to many of you, but the fact is that in order for us to stay in business we have to make a profit. We aren't a multi billion dollar company without a soul that the government is going to bail out if we can't pay our bills.

I'm extremely sorry for having to collect this tax. If the law should change and we aren't required to collect we will immediately cease to. Until then it's as they say; "Nothing is certain but death and taxes."

Thank you for your continued support and business!

Sincerely,
Brent Oxley
HostGator.com Founder

[fab]

Well, at least they have a sense of humor. BTW, Texas has no income taxes if I'm not mistaken?

[draggar]

I think we're going to start seeing a lot more of this. The states have been missing out on one huge cash cow by taxing internet sales - but the question is where is the tax based?

Where the seller is since that is where the product is being sold?
Where the buyer is since that is where the product will be delivered?
Both? (I really hope not!)

[Area52]

Well, at least they have a sense of humor. BTW, Texas has no income taxes if I'm not mistaken?

Right, Texas has no income tax. The state does charge a sales tax on most tangible items and certain services at a rate of 6.25%.Total sales tax rate can be a maximum of 8.25% (usually is) with city ,county, transit and special purpose taxes added. It seems to work well. The U.S. government could probably be run on a similar plan if citizens are ever successful in getting rid of career politicians, special interest groups and especially, wealth spreaders.

In general there is no federal/intrastate sales tax on internet purchases.
If the seller and buyer are located in different states, no sales tax.

Interstate sales are subject to sales tax, if any.
If the seller is located in the same state as the buyer, you owe sales tax.

I'm suprised that Hosting is taxable.

[Acro]

Locality has always been taxable for products, I believe it's new for services. If you think 8.25% is a lot, try the European Union where services are taxed up to 23% as VAT (Value Added Tax)

[Gerry]

Been going on here in NC for a while.

It was originally set up as the "honor system" were tax filers were supposed to claim their internet purchases and then pay the state sales tax.


But, if you live in Texas and HAVE NOT been paying taxes, then someone may get in some hot water as HostGator is based in Houston Texas.

And, most likely, they should have been charging Texas residents state tax all along.

And that letter from Brent seems to clarify both of these points.

[Aleksandar]

Locality has always been taxable for products, I believe it's new for services. If you think 8.25% is a lot, try the European Union where services are taxed up to 23% as VAT (Value Added Tax)

19% here...

Here's a nice article:

http://www.economywatch.com/business...ax-system.html

[500,000]

...

[Raider]

The email does not appear very professional, Are you sure it's for real? it could be somebody trying to put one over on you.

If it is for real, You can always change your billing address to another state and pay them though Paypal, But I would only do this if Texas is throwing your tax dollars away on Government entitlements and illegal aliens the way California does.

[fab]

the email does not appear very professional, are you sure it's for real? It could be somebody trying to put one over on you.

If it is for real, you can always change your billing address to another state and pay them though paypal, but i would only do this if texas is throwing your tax dollars away on government entitlements and illegal aliens the way california does.

he should see this in his next bill!

[raoul]

European union is bigger cr*ap on "virtual goods", minimum VAT rat in EU is 15% (for non-food items). Actually ANY company (even USA) that sells "virtual goods" to european customers (no company) must collect the VAT. Companies outside european union trading in european union are supposed to open a company in one of its memberstates, and file VAT + payment

Ofcource only the big companies do that, like google, some small company with 1 million turnover will not open an office, but formally its an obligation!