Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

Sales Tax for SaaS services

Hi everyone,

I was asked earlier today if I knew what the sales taxes in Texas would be for a SaaS/Cloud service and I had no idea. When I went to do some research on it, I found that saas and cloud services are a big gray area for many states.

It looks like Texas does tax those services but I couldn't find a number of what the sales tax would be.

Any help is greatly appreciated!

6 Replies

David Crooke
1
0
David Crooke Entrepreneur
Serial entrepreneur and CTO
There are 3 components to Sales Tax in Texas ...... state (6.5%), county (varies) and local (varies) ..... here in Austin you charge all three, 8.25% total. If you're in Austin, ping me offline :)
David Crooke
0
0
David Crooke Entrepreneur
Serial entrepreneur and CTO
Oh, you don't collect from out of state customers where you don't have ground presence, they pay Use Tax locally, and if the customer is tax exempt (501(c)3 non profit) then you don't charge them either, file a copy of their IRS certification.
removed Remover
0
0
removed Remover Entrepreneur
Freelance Software Product Developer at Greenfield Innovation
You can offload that whole class of problem to specialists.
E.g., use an API to determine a tax rate per deal.

http://developer.avalara.com/

Arthur Veytsman
0
1
Arthur Veytsman Entrepreneur • Advisor
Founder at Immerss, 6x Entrepreneur & Angel Investor. Building relationships with Angel Investors worldwide.
Luis, I unfortunately have plenty of experience in this area. My prior company was selling limo software as a service.I'll be glad to help. Let me know if you still need it.

Mark Lawler
0
0
Mark Lawler Entrepreneur
Mark Lawler: Senior Technology Executive

Hi Luis,


You are right that software as a services is a very gray area in the sales tax law. While many states have taken very firm stances on the issue, many rely on previously defined rules governing what is taxable and what is exempt in the state.

As it would related to TX, they are one of the states that does relies on the gray area of their law as it relates to software as a service offerings. For a complete analysis of the law, you may want to check the follow provisions: Sec. 151.009, Tax Code; Sec. 151.010, Tax Code; 34 TAC Sec. 3.308(b)(2); 34 TAC Sec. 3.308(b).

At a high level, TX takes the position that any software is taxable irrespective of its delivery method. They further go on to elaborate that SAAS is also taxable if it is deemed to be "data processing services". There are several other rulings that I could point out for you but at high level, I do believe that the above would answer your question: SAAS and cloud computing are taxable in TX. If the vendor does not charge sales tax to you on the invoice, you should accrue and remit the use tax that would be due to the state.

The TX state rate is 6.25% percent but there are also local rates that apply generally making the total rate somewhere closer to 8.25%. There is a great sales tax rate lookup directly on the state's website under the "Local Sales Tax" area where you can easily plug in an address and get back the correct rate for that would be due.

Here's to hoping that this helps sheds some light on this gray area for and good luck as you move forward with this tough problem.

Rob Gropper
0
0
Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
i would sure like to see some legislation (federal unfortunately) that would place a moratorium on remittance of sales or use taxes for SaaS/online services at the state and local level until a state provides a free, well-documented, and high-performance API with clear and concise methodology for calculating and remitting said taxes. This is 2014 isn't it?
Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?