February 19, 2006 – (HOSTSEARCH.COM) – Web hosting provider Neotrope Hosting (http://www.neotrope.com) has announced that it is moving its web server hardware out of its co-location facilities located in Dallas County, Texas, USA due to what it calls a "blackmail tax" imposed on companies who co-locate computer equipment with hosting facilities in that state. The company purportedly received a "property tax" bill for 2005 which amounted to 8% of the value of its hardware simply because it was located in Dallas County.
"It's astounding to me that the State of Texas, along with Dallas County consider it appropriate to levy a property tax on companies from other states with computers sitting in a co-location datacenter, where that facility already pays property taxes and license fees locally," said Neotrope president Christopher Simmons. "I got a bill today for what amounts to $175 per machine, where the current value of the machine is certainly no more than $2300, and their basis for levying a tax is $5,000. A machine purchased new in early 2004 for $3200 is certainly not worth that amount two years later, and certainly not $5,000. The Dallas tax assessors apparently decided -- without prior consultation or inquiry into the 'actual' equipment -- that the value of our machine is $5,000 and then sent us a bill for property tax based on some averaged amount."
According to the company the first bill they received related to this issue ‘had the appearance of just another faux 'scam' invoice like those we get every month from organizations trying to 'phish' us based on our trademarks, domain names, DBAs, or other public business license records.’ As a result, the bill was not paid and the item was handed over to the Dallas tax authority's Assessor-Collector, who issued a "Notice of Delinquent Taxes" and, according to Mr. Simmons, “began to charge 11.49% interest and penalties on top of the original incorrectly calculated "property tax" amount.”
He added, "It amazes me that these people seemingly made no effort to require our datacenter to send us a formal note that taxes would be levied on our equipment, or that such a tax law existed or had been enacted, and then just starts sending folks tax bills out of the blue," added Simmons. "Especially considering we paid sales tax on the original machine, then shipping costs to have it shipped into Texas, where the shipper had to buy fuel in that state, and then we're paying monthly fees to the datacenter; and presumably the building where our machine lives has property tax, and the datacenter is paying other local taxes if not income tax."
"Now that we're moving our equipment out of their unfriendly locale, all they have done, in effect, is hurt their local businesses by dinging us for a 'property tax.' I guess if I loan a friend a DVD player and ship it to Texas, I'll have to pay so-called property tax on that. I guess Netflix(R) will soon have to pay taxes on DVDs which sit at somebody's house in Texas. Where will this end? We have lots of other options, and Texas won't be seeing any more tax money from us in this form after 2006."
"And, of course, since they now consider the tax to be delinquent, it could adversely impact our credit rating if we don't pay their tax bill, which amounts to a form of blackmail in my mind," concluded Mr. Simmons.
