5 ms·

the HN title here is a little FUD... The article states: "The new rule states that if you use a server that is housed in the state of Texas, you have Texas ne

by dotBen 16y ago

the HN title here is a little FUD... The article states: "The new rule states that if you use a server that is housed in the state of Texas, you have Texas nexus for sales tax. That means you must collect and pay sales tax from any taxable sales made to customers within the state of Texas." So let's assume this isn't bunk (I'm not convinced this is true, but anyways...) what she is saying is that you would have to collect sales tax on sales to other folks who reside in Texas. For a start, this wouldn't apply to you unless you are running a sales business and even then it has to be one that is selling goods rather than services. So advertising, pro services and SaaS orientated businesses, this wouldn't apply to you. If you use a TX HQ'd host but run on servers outside of Texas it doesn't apply either - so Linode's hosted in London, Atlanta, Newark or Fremont (dude, there's a fault line there, you know?) are ok too. If this is in fact true, and you are running a sale of goods business, you would want to make sure your webhost never migrates you to a TX datacenter otherwise you could suddenly be liable for uncollected state tax :/ I'm going to look into this because we run a hosting business out of TX.

dotBen 16y ago
Further thoughts: I wonder how they are defining 'servers located in TX'? * Would a database server located in TX but web pages served to customers from California be ok? * What about servers in California but you use Akamai for CDN and you serve most TX customers via an Akamai edge-cache in TX It's not really HN subject matter, but don't forget this pales into insignificance compared to the new tax law which says you have to fill out and issue a 1099 to anyone you buy more than $600 of stuff from: http://money.cnn.com/2010/05/05/smallbusiness/1099_health_care_tax_change/ http://money.cnn.com/2010/05/05/smallbusiness/1099_health_ca...
- DanielBMarkham 16y ago
  It's not really HN subject matter, but don't forget this pales into insignificance compared to the new tax law which says you have to fill out and issue a 1099 to anyone you buy more than $600 of stuff from: I have a startup. Now I have to do this. It pisses me off. I'm thinking that's about as much an "HN Matter" as anything else on the front page. This is the "death by a thousand cuts" scenario: lots of little piddly nuisances which add up to a regulatory nightmare. None of them are really all that onerous, but taken together, well, things accumulate, and perception is 9/10ths of reality. There is an aggregation of PITAs from state, local, and federal governments. I'm not saying that in an anti-government way. Whatever your feelings about taxation and government, it's more of an issue of the bus heading down the road and nobody is driving than anything else.
- tedunangst 16y ago
  "Would a database server located in TX but web pages served to customers from California be ok?" No. The central point is a piece of your business is inside of Texas. This appears to be somewhat moot, as it looks like there's some uncertainty as to interpretation, but generally, it doesn't matter what part of the business is in the state, just that any part is.
  - IgorPartola 16y ago
    What if you use a "cloud" database and don't know whether your service ever runs on servers in Texas?
    - pyre 16y ago
      I'd imagine that they would be at the same disadvantage to prove that as you would be.
      - metageek 16y ago
        Or they might take the position that you're liable as long as the cloud you use contains any servers in TX. The theory would be that the existence of those servers helps you offer a more reliable service to TX customers, whether or not you actually use them. Probably a weak theory, but TX doesn't seem to care about that. When I used to have a shell account on io.com in the mid-90s, TX started forcing them to charge me sales tax, even though I was clearly not present in TX.
- trunnell 16y ago
  At the risk of going off-topic... ...the new [1099] tax law... There's a lot of noise being made about this but I think it's mostly FUD. I ran a small business for about six years and had to file 1099s. Filing 1099s was really easy. If I had to, I could probably even do it retrospectively to meet this >$600 requirement without breaking a sweat: my business credit card aggregated all yearly purchases by merchant and by category. It would be a simple matter of looking at my year-end statement as all my business expenses were paid with that account. Also, the most basic Quicken-like accounting packages offer the same functionality. If there are market gaps for simple software (or bank statement reporting) they will be filled quickly. So I think this is much ado about a very small problem. Still, there's a good chance the opposition to this relatively minor reporting requirement will force it to be repealed. If it does go into effect, I would expect the IRS to offer better automated filing for 1099s if for no other reason than to make their own jobs easier. I have trouble believing those who complain so loudly about this requirement (thread parent excluded) because so often they are opposed to the health care legislation on other grounds. On balance, this health care law is designed to be a huge net positive for small businesses-- in addition to new tax credits to help them pay their employees' premiums, for the first time there will be public group policies available in the new health care exchanges with real competition. Costs should go down for small businesses, significantly. Doing a couple hours of extra accounting each year pales in comparison to these benefits.
  - anamax 16y ago
    > Costs should go down for small businesses, significantly. Obamacare's congressional supporters are not claiming that these days. If anything, they're saying that it won't reduce spending and wasn't intended to. What do you know that they don't? (Note that they'd like to claim savings for political reasons.)
rjamestaylor 16y ago
Look for a public clarification on this soon (very soon) -- it's not intended to affect webhosting according to the Comptroller's office. See my previous comment.
dangrossman 16y ago
Unlike other states, a lot of services and digital goods are subject to sales tax in Texas. The article mentions a few examples.

by dotBen 16y ago

dotBen 16y ago

Further thoughts: I wonder how they are defining 'servers located in TX'? * Would a database server located in TX but web pages served to customers from California be ok? * What about servers in California but you use Akamai for CDN and you serve most TX customers via an Akamai edge-cache in TX It's not really HN subject matter, but don't forget this pales into insignificance compared to the new tax law which says you have to fill out and issue a 1099 to anyone you buy more than $600 of stuff from: http://money.cnn.com/2010/05/05/smallbusiness/1099_health_care_tax_change/ http://money.cnn.com/2010/05/05/smallbusiness/1099_health_ca...

DanielBMarkham 16y ago
It's not really HN subject matter, but don't forget this pales into insignificance compared to the new tax law which says you have to fill out and issue a 1099 to anyone you buy more than $600 of stuff from: I have a startup. Now I have to do this. It pisses me off. I'm thinking that's about as much an "HN Matter" as anything else on the front page. This is the "death by a thousand cuts" scenario: lots of little piddly nuisances which add up to a regulatory nightmare. None of them are really all that onerous, but taken together, well, things accumulate, and perception is 9/10ths of reality. There is an aggregation of PITAs from state, local, and federal governments. I'm not saying that in an anti-government way. Whatever your feelings about taxation and government, it's more of an issue of the bus heading down the road and nobody is driving than anything else.
tedunangst 16y ago
"Would a database server located in TX but web pages served to customers from California be ok?" No. The central point is a piece of your business is inside of Texas. This appears to be somewhat moot, as it looks like there's some uncertainty as to interpretation, but generally, it doesn't matter what part of the business is in the state, just that any part is.
- IgorPartola 16y ago
  What if you use a "cloud" database and don't know whether your service ever runs on servers in Texas?
  - pyre 16y ago
    I'd imagine that they would be at the same disadvantage to prove that as you would be.
    - metageek 16y ago
      Or they might take the position that you're liable as long as the cloud you use contains any servers in TX. The theory would be that the existence of those servers helps you offer a more reliable service to TX customers, whether or not you actually use them. Probably a weak theory, but TX doesn't seem to care about that. When I used to have a shell account on io.com in the mid-90s, TX started forcing them to charge me sales tax, even though I was clearly not present in TX.
trunnell 16y ago
At the risk of going off-topic... ...the new [1099] tax law... There's a lot of noise being made about this but I think it's mostly FUD. I ran a small business for about six years and had to file 1099s. Filing 1099s was really easy. If I had to, I could probably even do it retrospectively to meet this >$600 requirement without breaking a sweat: my business credit card aggregated all yearly purchases by merchant and by category. It would be a simple matter of looking at my year-end statement as all my business expenses were paid with that account. Also, the most basic Quicken-like accounting packages offer the same functionality. If there are market gaps for simple software (or bank statement reporting) they will be filled quickly. So I think this is much ado about a very small problem. Still, there's a good chance the opposition to this relatively minor reporting requirement will force it to be repealed. If it does go into effect, I would expect the IRS to offer better automated filing for 1099s if for no other reason than to make their own jobs easier. I have trouble believing those who complain so loudly about this requirement (thread parent excluded) because so often they are opposed to the health care legislation on other grounds. On balance, this health care law is designed to be a huge net positive for small businesses-- in addition to new tax credits to help them pay their employees' premiums, for the first time there will be public group policies available in the new health care exchanges with real competition. Costs should go down for small businesses, significantly. Doing a couple hours of extra accounting each year pales in comparison to these benefits.
- anamax 16y ago
  > Costs should go down for small businesses, significantly. Obamacare's congressional supporters are not claiming that these days. If anything, they're saying that it won't reduce spending and wasn't intended to. What do you know that they don't? (Note that they'd like to claim savings for political reasons.)

rjamestaylor 16y ago

Look for a public clarification on this soon (very soon) -- it's not intended to affect webhosting according to the Comptroller's office. See my previous comment.

dangrossman 16y ago

Unlike other states, a lot of services and digital goods are subject to sales tax in Texas. The article mentions a few examples.