Web Hosting Services Subject to Arizona's Transaction Privilege Tax

Monday, August 24th, 2015

 
 
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The Arizona Department of Revenue (DOR) ruled that a web hosting business owed tax under the personal property rental classification for the gross income it received for various monthly web hosting plans.

Customers were charged a monthly fee to create their own websites using the business's software. The DOR ruled that the customers gained enough control of the software that the monthly fees were taxable as the rental of tangible personal property (i.e., the software). In addition, the various web hosting plans included processing services, access to third-party applications, and digital stock photography. Charges for these items were included in the tax base of the rental of the software and were therefore taxable.

Finally, the DOR determined that domain registration fees were taxable because the business could not identify what percentage of its fees were for domain registration. These fees therefore did not meet the requirements to be considered a separate line of business. As a result, they were also included in the tax base of the taxable monthly fees.

https://www.azdor.gov/Portals/0/PrivateRules/15-005-D.pdf


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

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