Taxes Are Hard (Texas Tax Edition) - Part 1

Taxes are hard, and along the lines of "don't mess with Texas", internet taxes in Texas go above and beyond the norm.  The basics of Texas internet taxes are as follows.

Note: Because of the complications of Texas taxes, this article is broken down into several manageable posts. The first two, of which, specifically cover a summary of rules for Texas taxes.

Internet Access Service

• Internet access services (including enhancements such as static ip addresses, email and instant messaging) are taxable. (Texas Tax Code - Section 151.0101(a)(16))
• Up to $25 for internet access per month are tax exempt. (Texas Tax Code - Section 151.325)

Web Development and Information Services

• Web development and information services (including web page design and web hosting) are taxable. (Texas Tax Code - Section 151.0101(a)(12))
• Twenty percent (20%) of the value of data processing and information services are tax exempt. (Texas Tax Code - Section 151.351)

Seems simple, doesn't it?  Now for the semantics.

• Taxes for these services went into effect on October 1, 1999. (Document 9906479L)
• Late fees are not taxable, but reinstatement (reactivation) fees are taxable (Document 200001959L)
• The $25 exemption applies per purchaser not per account.  So, if the purchaser has multiple accounts, up to $25 is exempt for all the accounts combined. (Texas Tax Code - Section 151.325(c))
• A seller who uses catalogs or the Internet to sell goods is treated the same as any other seller of taxable items. If you purchase merchandise through a catalog or the Internet from a seller located in Texas, you owe Texas sales tax on the purchase. If you purchase merchandise through a catalog or the Internet from a seller located outside of Texas and use the taxable item in Texas, then you owe Texas use tax on the purchase. An out-of-state mail-order company or an Internet company may hold a Texas Sales and Use tax permit and collect Texas tax. If the out-of-state seller does not have a Texas permit or does not collect Texas use tax, the use tax is due and payable by the purchaser. (Texas Sales Tax FAQ)
• Internet access taxes for Texas are grandfathered under Internet Tax Freedom Act and are considered exempt from that act.
• The state tax rate is 6.25%. (Window on State Government - Texas Taxes - Sales and Use Tax)
• The city tax rate cannot exceed 2%. (Window on State Government - Texas Taxes - Sales and Use Tax)
• The county tax rate cannot exceed 1.5%. (Window on State Government - Texas Taxes - Sales and Use Tax) 
• The combined tax rate cannot exceed 8.25%, where 6.25% is state taxes and the remaining 2% is comprised of local sales or use taxes in the form of city, county, transit and special district taxes. (Window on State Government - Texas Taxes - Sales and Use Tax)

Continued in Part 2.