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Sales Tax State Activity Update - September 2006

Utah Differentiates Computer Hosting Services

The following two types of hosting services are provided by the Taxpayer:

1. Remote administrative/monitoring hosting services and
2. Information/data hosting services
   
   

For the remote administrative/monitoring hosting services, the Taxpayer provides remote management services of the customer's computer environment.

The equipment is owned by the customer and located at the customer's office. The Taxpayer owns and maintains the server equipment at its location in Utah for the customer in the information/data hosting services.

The server equipment maintained by the Taxpayer provides storage and backup of data and the tools to support the customer's information systems infrastructure. This service operates as an outsourced technology department.

Questions

1. Is the sale of remote administrative/monitoring hosting services by the Taxpayer subject to Utah sales tax?
2. Is the sale of information/data hosting services by the Taxpayer subject to Utah sales tax?
3. Is the sale of remote administrative/monitoring hosting services by the taxpayer subject to Utah sales tax if computer equipment/hardware is sold with the services?

Ruling

1. The sale of remote administrative/monitoring hosting services by the taxpayer should not be subject to Utah sales tax because it is not numerated as a taxable service in Utah Code Ann. §59-12-103 and no tangible personal property is provided with the service.
2. The sale of information/data hosting services by the Taxpayer should be subject to Utah sales tax because the sale involves the leasing of tangible personal property.
3. The sale of remote administrative/monitoring hosting services with the sale of computer equipment/hardware by the Taxpayer should not be subject to Utah sales tax if the amount of the taxable computer equipment/hardware is separately stated.

The full ruling may be accessed on the Utah State Tax Commission Website.

(Utah Tax Commission, Private Letter Ruling, 06-004, 7/26/06)

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