Hostgator in hot water?

This was received recently

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!


Brent Oxley Founder

I guess if a company like that doesn’t even understand tax laws, how is anyone else supposed to figure it out.

It does make you wonder who is running that company does it?

Its a state sales tax. When you sell online in the US, you don’t have to charge State Sales tax, unless the person you are selling online to, is in the same state as your registered business location. (which is a pretty well known fact). They have not been charging Sales Tax to Texas residence since day one, so that is years and years of 8.25% sales tax for every account based in Texas, that they did not charge for. The reason for my comment on the business, is a larger company like them should have known that, which means, were they trying to get away with it, and got caught, or did they really not know? I can’t believe they didn’t know, as one simple call to the State Comptroller (Texas State tax office) would have told them.

Any “corruption” within most companies is only as much as the government regulator will “allow”. So your statement about who is running the country is correct. Corruption is rampant (As seen by recent events by BP). The regulator of the drilling operation was “In talks to be hired by the drilling company that he was regulating”, so he let all the violation get ignored. Had he DONE his job, that accident would not have happened. ~a little OT, but still to the point of Shaun. He was correct in his assumption. (Who is running the country? (or state for those of you that spend your time correcting semantics, instead of actually reading what the topic meant))…

I don’t understand this comment.

I recently got this too. I was shocked by how much they had to pay. That was probably just a settlement. But who know. I think I’d fire my CFO and look for another one



If my company was at least a $100mil a year company, I am sure I would have hired someone, that could…

(that is based off their site claim of 2.5mil domains hosted)

I will completely agree with that statement. :smiley:

You mean running the state of Texas. It’s a state tax.

[FONT=“Georgia”]Nah, if I’d gotten that, it’d make me wonder who was running the country :slight_smile:



Sorry, not “country”.

What I meant was, my automatic thought isn’t, “The company is a mess,” the first thing I’d wonder about is, “What tax? Where’d it come from? Why is it so high?”

Admittedly a little reactionary on my part (I need to watch that); Because I’m tired of the almost default view these days of, “Those evil businessmen had it coming.” Maybe that’s not the view where you’re from, but in Trinidad, there’s so much corruption across the board, and rich *******s shaking hands in the shadows with political leaders, that there’s a growing anti-capitalist sentiment among the University and the intellectuals here.

Then again, I think many people don’t actually know what the word means.


You try understanding and incorporating 50 constantly changing tax laws someday.

I think Hostgatot should try to manage tax for the customer signup till now in that region otherwise they can loose lot’s of customer.