4 ms·

Payment processing services will most likely provide a solution to do this automatically. Charging credit cards is already pretty complicated, and they abstract

Payment processing services will most likely provide a solution to do this automatically. Charging credit cards is already pretty complicated, and they abstract it away already, so it would make sense for them to provide this as an additional service.

tpurves 8y ago
In fact they do already.
pwned1 8y ago
Agreed. I envision "tax compliance as a service" being offered by processors or third parties. My only question is then whether individual municipalities in states that allow them to have their own sales tax will also now be able to force compliance. If that's the case, what a nightmare for online retailers.
- lovich 8y ago
  That's how large retailers do it already. I worked at a company that created software for calculating sales and use tax for large retailers. It was an incredible headache and I doubt any retailer would do it themselves since they can also point to the vendor as the liable party when a mistake is made, and those mistakes will be made. We even had areas where we could not find the correct tax because the government in charge refused to tell us
  - mgkimsal 8y ago
    And... I've conflicting info from different states as to when the sales tax should be calculated. I'm dealing with a project right now that is both "pay now" and "delivery and services paid for later". At least one state said they'd prefer us to calculate the tax both at 'time of sale' and after money is collected after the service is provided/delivered, and because the rate may have changed (between months, for example) and they want the higher amount.
    - lovich 8y ago
      And there was that standardized sales tax system that the states were going to adopt but only ~15 did if I recall correctly. I can't remember the name but I do remember that each state then added their own idiosyncrasies to the "standard" and they inserted incorrect data we had to catch. Or the 100s of thousands of literal exceptions such as "windows 98 physically shipped to a customer once in California on CD so you need to calculate the tax on it as a physical good forever, even when it's sold and received over the internet"
- Spivak 8y ago
  I mean if you're already offering a tax compliance service for 50 different sets of books does it really get that much more complicated adding more?
- URSpider94 8y ago
  Already done, Google AvaTax and TaxJar.
- gnopgnip 8y ago
  The supreme court decision was basically a refinement of what constitutes a nexus with respect to common carrier shipments. 200 sales, or $100k in revenue per year is what is reasonable here. It will be interesting to see what LA, Chicago, and NYC do to handle this specifically.
jakejohnson 8y ago
Payment processing services could certainly build out their own solution to collect and remit sales tax, but a lot of merchants sell on a variety of platforms and channels. For instance, a merchant might sell on Amazon and their own eCommerce site powered by Shopify. They might also have an ERP system as a "single source of truth" to record all of their transactions. Each of these platforms collect sales tax differently, possibly providing automatic calculations or simply leaving it to you to provide your own rates. This can get complicated very quickly and a payment processing service only has insight into the data you're passing over to them. That's why companies like TaxJar and Avalara are focused on sales tax -- to integrate with every shopping cart, payment processor, marketplace, accounting, order management / ERP platform out there to combine all of your transaction data and determine how much sales tax you need to remit in every state.
rossdavidh 8y ago
They can match up rate to location, but most jurisdictions have their own laws on what items are taxable. There are also jurisdiction-dependent tax holidays. For example, Texas has a weekend in August where certain kinds of items (that are "back-to-school" appropriate) are tax free. So you have to know not only the rate, but also the rules for categorization, and those vary by jurisdiction and time of year, sometimes differently from year to year.
anonymous5133 8y ago
They will just hire avalara to do it. Do you think a payment processor is going to hire hundreds of tax accountants to look all this stuff up? Cheaper to just hire avalara to do it for you.

tpurves 8y ago

In fact they do already.

pwned1 8y ago

Agreed. I envision "tax compliance as a service" being offered by processors or third parties. My only question is then whether individual municipalities in states that allow them to have their own sales tax will also now be able to force compliance. If that's the case, what a nightmare for online retailers.

lovich 8y ago
That's how large retailers do it already. I worked at a company that created software for calculating sales and use tax for large retailers. It was an incredible headache and I doubt any retailer would do it themselves since they can also point to the vendor as the liable party when a mistake is made, and those mistakes will be made. We even had areas where we could not find the correct tax because the government in charge refused to tell us
- mgkimsal 8y ago
  And... I've conflicting info from different states as to when the sales tax should be calculated. I'm dealing with a project right now that is both "pay now" and "delivery and services paid for later". At least one state said they'd prefer us to calculate the tax both at 'time of sale' and after money is collected after the service is provided/delivered, and because the rate may have changed (between months, for example) and they want the higher amount.
  - lovich 8y ago
    And there was that standardized sales tax system that the states were going to adopt but only ~15 did if I recall correctly. I can't remember the name but I do remember that each state then added their own idiosyncrasies to the "standard" and they inserted incorrect data we had to catch. Or the 100s of thousands of literal exceptions such as "windows 98 physically shipped to a customer once in California on CD so you need to calculate the tax on it as a physical good forever, even when it's sold and received over the internet"
Spivak 8y ago
I mean if you're already offering a tax compliance service for 50 different sets of books does it really get that much more complicated adding more?
URSpider94 8y ago
Already done, Google AvaTax and TaxJar.
gnopgnip 8y ago
The supreme court decision was basically a refinement of what constitutes a nexus with respect to common carrier shipments. 200 sales, or $100k in revenue per year is what is reasonable here. It will be interesting to see what LA, Chicago, and NYC do to handle this specifically.

jakejohnson 8y ago

Payment processing services could certainly build out their own solution to collect and remit sales tax, but a lot of merchants sell on a variety of platforms and channels. For instance, a merchant might sell on Amazon and their own eCommerce site powered by Shopify. They might also have an ERP system as a "single source of truth" to record all of their transactions. Each of these platforms collect sales tax differently, possibly providing automatic calculations or simply leaving it to you to provide your own rates. This can get complicated very quickly and a payment processing service only has insight into the data you're passing over to them. That's why companies like TaxJar and Avalara are focused on sales tax -- to integrate with every shopping cart, payment processor, marketplace, accounting, order management / ERP platform out there to combine all of your transaction data and determine how much sales tax you need to remit in every state.

rossdavidh 8y ago

They can match up rate to location, but most jurisdictions have their own laws on what items are taxable. There are also jurisdiction-dependent tax holidays. For example, Texas has a weekend in August where certain kinds of items (that are "back-to-school" appropriate) are tax free. So you have to know not only the rate, but also the rules for categorization, and those vary by jurisdiction and time of year, sometimes differently from year to year.

anonymous5133 8y ago

They will just hire avalara to do it. Do you think a payment processor is going to hire hundreds of tax accountants to look all this stuff up? Cheaper to just hire avalara to do it for you.