The place to find business sales tax information

— as well as solutions, services and jobs!

Our Texas telecom cloud company wants to expand into other states. Are our services taxable in other states? Do we charge TX rate or other?

Full Question: We are a Texas based Telecom Cloud Port VoIP service provider, looking to expand our services to Oklahoma, Louisiana and possibly New Mexico. Would State sales and use taxes be applicable for customer services outside of Texas? If so, what tax rate is to be charges? Texas rates or the other state tax rates?

Brought to you by:

NOTE: This site does NOT provide client-specific tax advice. Information provided is general and may NOT apply to your particular situation. Do NOT take any action based upon any site content until you have received advice from an independent, qualified tax practitioner with whom you have a professional-client relationship. All content is subject to our disclaimer.

Answer:

Diane Yetter photoThe determination as to whether your services would be subject to tax in other states where you look to do business will be first dependent on whether your company establishes nexus in the other states. If you are not entering the state at all and doing all work remotely from TX, then nexus might not be established. However, this needs to be evaluated closely based on all your activities that may occur in the state include use of independent service or sales personnel, renting of equipment or facilities, or periodic visits into the states by your TX personnel (employees or independent). If it is determined that you do have nexus in these states, then you need to determine how the states will classify your product/service. Many states consider VOIP to be telecommunications and would tax this under their telecommunication taxes. However, if your product/service is a more traditional cloud service that is not a communication service, then it might be considered computer software or a cloud service. Without knowing more about your specifics, we can not provide specific guidance. We do offer consulting services and would be happy to talk to you about whether your activities create nexus and then how the states would classify your products/services to determine taxability in any state where you establish nexus. If you need further assistance with this matter, please feel free to contact us directly.

(Not quite what you need? View SALES TAX QUESTIONS home page to access other topics or use site-wide SEARCH in upper right)

Disclaimer:

Access to any portion of SalesTaxSupport.com is contingent upon your acceptance of our Terms of Use. This Web Site and content provided by STS Publishing, LLC and its third party content providers, including, but not limited to information, documents, forms, comments, advice and opinions, is for informational purposes only, and is not a substitute for professional advice, nor does the use of this Web Site constitute a professional-client relationship. The Web-Site also includes advertisements, directory listings, job postings and links to third party web sites, all of which are provided for your convenience only and in no way constitute a referral, endorsement, or warranty by SalesTaxSupport.com of any product or service provided by such third parties. All content is provided “as is” with no guarantee regarding accuracy, suitability, or timeliness. Your reliance on any content accessed on or through the Web Site, or on any product or service provider is strictly at your own risk.