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TEXAS SALES TAX

As a business in Texas with a server located in Texas WE ARE REQUIRED to charge EVERYONE Texas State Sales Tax on taxable purchases, whether you are located in Indiana or Indonesia. Below is an email we received from the State Comptrollers office in response to questions regarding collection of these taxes.

The data processing rule provides for customers receiving benefit of use EXCLUSIVELY outside Texas to be exempt from Texas tax. The rule also provides for multi-state benefit for customers that receive benefit of the service both within and outside Texas. The purchasers of data processing and other taxable services who issue exemption certificates are responsible to self assess and remit the use tax themselves to the State of Texas. There are exemption certificates available from the State of Texas.

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From: Philip Knisely
Sent: Monday, June 14, 2004 1:23 pm
Subject: 04138921- Web Advertising

Thanks for using tax.help email to inquire about website advertising and Texas sales tax.

You state that a customer purchases an account which allows them to post classified ads on a website for a set period of time. You asked if the purchase is subject to Texas sales tax.

Response: The placement of an announcement, notice, commercial, or advertisement on a web page belong to another is Internet advertising, and the charge is not taxable. Examples of Internet advertising are banner ads, text links, skyscraper ads, vertical banners, or a combination thereof. However, if there is a charge to create a website or web page before the advertisement can be placed, then the charge for the website creation is taxable as a data processing service. If there is a charge to store data or for file maintenance on its web server, including charges for a web page and/or web hosting, then the charge for the web page or web hosting is also taxable as data processing service.

This opinion is based on the facts presented. Additional or different facts may yield different results.

Please let me know if you have additional questions.

Sincerely,
Philip Knisely
-------------------
Philip Knisely
Texas State Comptroller
Tax Policy Division
800.531.5441 ext 5.9787
or 512.305.9787

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