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We are an IT Managed Services company and provide most services over the Internet remotely. Should we charge sales tax on services?

Full Question: We are an IT Managed Services company and support SMB computer networks (firewalls, routers, servers, PCs) and we have contracts with our customers for Professional Services, of which roughly 85% are done over the Internet remotely. We will sell hardware and software to clients as a convenience and pay Sales Taxes on those products. Should we have to pay Sales Taxes on our Professional Services (knowledge)?

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Answer:

Diane Yetter photoThe taxability of your services will depend on the specific services you are providing. Computer maintenance contracts covering the cost of labor to repair and maintain computer hardware are taxable as service warranties. If your services relate to the maintenance and repair of hardware or software, it is likely taxable if the customer is located in FL. If the services are just for surveying a customer's needs and making recommendations is considered a professional service and not subject to tax. The nature of the service, where the customer is located and how you invoice will all impact the taxability of these types of services. if you would like additional assistance understanding your obligations, we do provide sales tax consulting services and would be happy to assist you in the evaluation.

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