Texas Comptroller of Public Accounts STAR System - 200009755L 200009755L September 27, 2000 ************** ************** ************** ************** Dear **************: Thank you for your recent letter regarding the sale of URL addresses and Texas sales tax. A separately stated charge for the sale of a URL address is not subject to Texas sales tax. Many Internet-related services are subject to Texas sales tax. Here is a list of some of the services we have addressed: 1. Charges for providing access to the Internet are taxable. Effective October 1, 1999, the first $25 charged per month for Internet access services is exempt from Texas sales tax. 2. Scanning information or data into the net and the creation of "HTML" documents is a taxable data processing service (with the 20% exemption explained below). 3. Creating graphics or logos using a drawing program for a client's homepage is taxable as graphic arts. 4. Posting/hosting web pages on a server are taxable data processing services (with the 20% exemption explained below). 5. Transmitting information between automated clearing houses and merchants is a taxable telecommunications service. 6. Providing access to information (databases maintained by the seller of the service) on the Internet is a taxable information service (with the 20% exemption explained below). 7. Separate fees for licensing and completing applications for domain names are not taxable. 8. Charges for continuing education classes on the Internet are not taxable. 9. Charges for submitting website information to search engines are not subject to tax. 10. Sales of maps over the Internet are taxed as information services (with the 20% exemption explained below). 11. Sales of software over the Internet are subject to sales tax if the software is downloaded to a location in Texas. No tax is due on sales of software downloaded to a location outside of Texas. The retailer must retain records to show the customer's out-of-state location if the software is downloaded to a point outside of Texas. Note: 20% of the charge for information services and data processing services purchased on or after October 1, 1999, is exempt from sales tax. For example, web page creation and domain hosting are treated as data processing services and 20% of the charge is exempt from Texas sales tax. If you provide any of the above mentioned services and separately state charges for those services, you should tax them accordingly. This opinion is based on the facts presented. Additional or different facts may yield different results. You may call me toll free 1-800-531-5441, extension 5-9787, if you have any questions or need more information. The direct line is 512/305-9787. You may also write to Tax Policy Division, Comptroller of Public Accounts. Sincerely, Philip Knisely Tax Policy Division ACCESSION NUMBER: 200009755L SUPERSEDED: N DOCUMENT TYPE: L DATE: 09/27/2000 TAX TYPE: SALES