An out-of-state seller can use a customer’s registered IP address to source sales for Texas sales tax purposes. The seller can source the sale based on the the physical address associated with the registered IP address.
Prepaid Wireless Telecommunications
The taxpayer sells text, video, and instant messaging services and Voice over Internet Protocol (VoIP) calling services on a prepaid basis. These services can be characterized as telecommunications services for Texas tax purposes. Prepaid wireless telecommunications services purchased over the Internet are sourced to Texas if the purchaser’s primary business address or residential address is in Texas.
When selling services, the taxpayer does not require a user to provide a billing, residential, or business address. When users register for an account, the taxpayer retains the user’s Internet protocol address or IP address. Then, the taxpayer uses a third-party service to link the IP address to a physical address. Under these facts, the taxpayer may use a customer’s registered IP address in place of a business or residential address to source sales to Texas.
Letter No. 201711002L (PLR #2017010107), Texas Comptroller of Public Accounts, November 9, 2017, ¶404-313
Texas enacted legislation on sales tax sourcing in the spring of 2017.