Texas Web Design / Hosting Biz Owners: Sales tax questions

This question is only for Texas business owners who run a web design / hosting company. How do you handle sales tax? I was told that we need to use the long form and determine which client is in which county, look up their tax rate, etc. Is this the same for you? What do you do?

I host with LimestoneNetworks.com located in Dallas. As I am also in Texas they add State Sales Tax to my bill. They do not add or collect tax for clients located outside Texas or outside the USA.

what i am wondering though - is do they collect sales tax based upon their location, or yours?

It is dependent on where your client is located. If you bill someone in California, they shouldn’t be charged Texas sales tax.

What I mean is if we are both in Texas … someone on the phone told me that if I am in one county, and someone is in another county (both of us being in Texas) then I may have to charge each client a different tax rate, depending upon who is from where. That sounds very weird and wrong to me.

TX, CA and CO are the only ones who do this in the entire nation.

The answer will depend on where you, the seller is located first. If you don’t reach 8.25% on the taxes applicable to your location (State and Local Combined), then you would collect local taxes based on your customer’s location until you reach 8.25% (State is 6.25%, so you only collect up to 2% on local taxes). But, if you can’t collect an entire local rate without going over 2%, then you don’t collect it.

Since I’m not yet eligible to post website links:
Go to the Texas Comptroller website and look for the "Local Sales and Use tax bulletin from February 2009. It’s under tax publications document tx94_105 in a pdf format (page 8 is particularly important).


Melanie, you rock! i just pm’ed you thanks

Thx Melanie …any info on online advertising …as a publisher of directories, banners, managing SEM campaigns …any of this taxable or non-taxable?