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Thankfully with Shopify it is extremely easy and straightforward to manage for my wife's small online store. Their platform does a great job properly charging t

Thankfully with Shopify it is extremely easy and straightforward to manage for my wife's small online store. Their platform does a great job properly charging taxes by state, county and city in certain situations. Then using an inexpensive plan from https://www.taxjar.com/ https://www.taxjar.com/ the entire filing and paying process is 100% automated. In 10 minutes I was able to file and pay all the sales taxes to several state, dozens of California counties and a handful of cities that charge additional taxes on top.

Retric 8y ago
So you assume. As a small business you are unlikely to be audited, but that software could easily be wrong creating a huge minefield and potential liability.
- esturk 8y ago
  So that would be the software companies' liability. And such business practice can differentiate good ones from the bad ones. I'm seeing a new business market here even.
  - Retric 8y ago
    https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window There is zero economic gain from more complex tax rules. Further, the software does not absolve you of liability. At best they may agree to cover it, but that's unlikely and they can also go broke if they get it wrong.
    - raverbashing 8y ago
      There is economic gain for those collecting it. Of course, how much you can squeeze people and businesses is an everlasting question.
      - madeofpalk 8y ago
        Complex tax does not mean greater tax.
    - moomin 8y ago
      There’s zero national economic gain from _any_ variation in law from state to state, but either you’re in favour of state’s rights or you’re not.
      - walshemj 8y ago
        There's a lot of similar problems with having sets of 52 plus federal employment laws. Its not surprising that one US right wing think tank thought the UK with its "socialist" NHS and higher income tax was a freer place to business.
      - dsfyu404ed 8y ago
        >here’s zero national economic gain from _any_ variation in law from state to state Yes there is. States compete with each other and this prevents any one of them from having laws that are much crappier and more oppressive than average because when that happens businesses and people leave.
        beojan 8y ago
        So competition might prevent one of many downsides to different states having different laws? I don't see why this means there's any benefit to that situation over just having one set of laws?
        scarface74 8y ago
        Depending on your political leaning, you wouldn’t want the same laws in GA as in CA.
        moomin 8y ago
        That’s a relatively unusual leaning. Most people think their values should be universal.
        beojan 8y ago
        https://en.wikipedia.org/wiki/Subsidiarity https://en.wikipedia.org/wiki/Subsidiarity Not as unusual as you would think, given that it is a basic principle of both the EU (despite what Eurosceptics would have you think) and the US.
    - Spooky23 8y ago
      States want to collect taxes. Now that they have a consistent policy position, you may see interstate agreements to harmonize collection. There is already a precedent with DMV data sharing agreements, and some states will collect sales taxes for others as well.
      - delinka 8y ago
        "...and some states will collect sales taxes for others as well." I'm having a hard time coming up with an example where this makes any sense. Can you elaborate?
        Spooky23 8y ago
        Sure. New York and New Jersey collect sales taxes for each other as an example. http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/prior_years/anj14_0706.pdf http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/prio... It’s a big deal for cars — without this people in NYC metro would have a hard time otherwise.
    - gamblor956 8y ago
      Actually, current sales tax software provided by South Dakota and other states does absolve a merchant for liability if used to calculate sales tax due.
      - DoctorOetker 8y ago
        I agree with this approach! Actually, the federal government should oblige each member state to provide the algorithm, and sign it cryptographically and have it expire every X fixed time interval, and have signed algorithms for the current and next time interval, so that software can automatically fetch and stay up to date. Then the "business opportunity" of navigating FUD evaporates. Currently any such enterprise charging for such a service can spend a fraction of their budget lobbying against harmonization... Since it would be an obligation of the states to the federal government, these algorithms (provided by each member state) should be hosted on a fixed federal government site. Time to start a petition?
        westurner 8y ago
        This would reduce costs of tax collection for all parties. What is the most convenient format for this layered geographic data? Are the tax district boundary polygons already otherwise available as open data? What do localities call these? Sales tax tables, sales tax database, machine-readable flat files in an open format with a common schema? How much tax revenue should it cost to provide such a service on a national level? States, Counties, Cities, 'Tax Zones'(?) could be required to host tax.state.us.gov or similar with something like Project Open Data JSONLD /data.json that could be aggregated and shared by a server with a URL registry, a task queue service, and a CDN service. While the Bitcoin tax payments bill passed the Senate and House in Arizona, it was vetoed in May 2018. Seminole County in Florida now allows tax payment with crytocurrencies such as Bitcoin: https://cointelegraph.com/news/us-seminole-county-florida-to-accept-crypto-for-tax-payment https://cointelegraph.com/news/us-seminole-county-florida-to... > According to a press release, the county will begin accepting Bitcoin (BTC) and Bitcoin Cash (BCH) to pay for services, including property taxes, driver license and ID card fees, as well as tags and titles. The Seminole County Tax Collector will reportedly employ blockchain payments company BitPay, which will allow the county to receive settlement the next business day directly to its bank account in US dollars. This could also help reduce the costs of tax collection and possibly increase the likelihood of compliance with the forthcoming tax bills!
  - waffle_ss 8y ago
    Nonsense. Your accountant isn't even liable if you're audited by the IRS. They're not gonna give a crap you used some rando SaaS
    - DoctorOetker 8y ago
      Which is why the sales tax calculation algorithm should published and cryptographically signed by each state: https://news.ycombinator.com/item?id=17367669 https://news.ycombinator.com/item?id=17367669
      - monetus 8y ago
        I wonder if a single member of congress knows what the words 'cryptographically signed' means...
    - hcknwscommenter 8y ago
      I think you are conflating several different types of liability here. If: i)your accountant messes up due to negligence or worse, ii) you get audited, and iii) it turns out you owe far more than you thought, then you are liable to the Govt for the extra amount owed. The accountant may be liable to you for professional negligence, damages etc. Your damages against the accountant are not the extra amount owed (because it is what you should have paid in the first place), but losses caused by the mistake. In the above scenario, the Gov't may assess a "penalty" and/or "fee" for late payment of taxes, but those fees are usually waived and/or extremely nominal. In the above-scenario, criminal liability simply does not happen. The above is not legal advice.
- bdcravens 8y ago
  Isn't the same true of TurboTax?
vxNsr 8y ago
This assumes these mom and pop shops have heard of these services. Personally I was helping someone get their little internet store off the ground and it was a huge hassle even with woocommerce.
- gowld 8y ago
  If they accept credit cards online, their credit card solution ought to include tax management feature. Usually, small shops can ignore stuff like this until they get a bill from an authority, or get big enough for it to matter. As long as they save money for estimated tax liability (approximately equal to their local tax rate), they are fine.
- sequoia 8y ago
  And what would it look like if Mom & Pop were starting an ice-cream shop instead of an online storefront? Would they _not_ have to pay tax then? I get that being subject to regulation or taxation is more burdensome than not being subject to it, of course that's the case. But it does not follow that requiring sellers to pay sales tax is unduly burdensome. If the underlying complication of tax is the problem, fix that.
  - williamscales 8y ago
    > And what would it look like if Mom & Pop were starting an ice-cream shop instead of an online storefront? Would they _not_ have to pay tax then? They would only have to pay sales tax in one tax jurisdiction, the one in which they are physically based and in which they can vote to change those taxes. > But it does not follow that requiring sellers to pay sales tax is unduly burdensome. What follows is requiring sellers to track and remit sales tax in some 10,000 jurisdictions is burdensome.
  - rossdavidh 8y ago
    With a brick-and-mortar storefront, they have to figure out one jurisdiction's salestax (rate and what is taxable), their own. That is quite literally orders of magnitude simpler than this.
omni 8y ago
How much do you end up having to pay for TaxJar? It looked to me like the monthly plan was cheap but you'd get totally hosed if you tried to use them to auto-file all the taxes. Are you filing yourself?
jhayward 8y ago
How do you handle knowing what items are taxable vs non-taxable for each item and taxing district? How do you handle customers who are tax-exempt? How do you handle tax holidays and reduced tax on school items in August?

Retric 8y ago

So you assume. As a small business you are unlikely to be audited, but that software could easily be wrong creating a huge minefield and potential liability.

esturk 8y ago
So that would be the software companies' liability. And such business practice can differentiate good ones from the bad ones. I'm seeing a new business market here even.
- Retric 8y ago
  https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window There is zero economic gain from more complex tax rules. Further, the software does not absolve you of liability. At best they may agree to cover it, but that's unlikely and they can also go broke if they get it wrong.
  - raverbashing 8y ago
    There is economic gain for those collecting it. Of course, how much you can squeeze people and businesses is an everlasting question.
    - madeofpalk 8y ago
      Complex tax does not mean greater tax.
  - moomin 8y ago
    There’s zero national economic gain from _any_ variation in law from state to state, but either you’re in favour of state’s rights or you’re not.
    - walshemj 8y ago
      There's a lot of similar problems with having sets of 52 plus federal employment laws. Its not surprising that one US right wing think tank thought the UK with its "socialist" NHS and higher income tax was a freer place to business.
    - dsfyu404ed 8y ago
      >here’s zero national economic gain from _any_ variation in law from state to state Yes there is. States compete with each other and this prevents any one of them from having laws that are much crappier and more oppressive than average because when that happens businesses and people leave.
      - beojan 8y ago
        So competition might prevent one of many downsides to different states having different laws? I don't see why this means there's any benefit to that situation over just having one set of laws?
        scarface74 8y ago
        Depending on your political leaning, you wouldn’t want the same laws in GA as in CA.
        moomin 8y ago
        That’s a relatively unusual leaning. Most people think their values should be universal.
        beojan 8y ago
        https://en.wikipedia.org/wiki/Subsidiarity https://en.wikipedia.org/wiki/Subsidiarity Not as unusual as you would think, given that it is a basic principle of both the EU (despite what Eurosceptics would have you think) and the US.
  - Spooky23 8y ago
    States want to collect taxes. Now that they have a consistent policy position, you may see interstate agreements to harmonize collection. There is already a precedent with DMV data sharing agreements, and some states will collect sales taxes for others as well.
    - delinka 8y ago
      "...and some states will collect sales taxes for others as well." I'm having a hard time coming up with an example where this makes any sense. Can you elaborate?
      - Spooky23 8y ago
        Sure. New York and New Jersey collect sales taxes for each other as an example. http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/prior_years/anj14_0706.pdf http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/prio... It’s a big deal for cars — without this people in NYC metro would have a hard time otherwise.
  - gamblor956 8y ago
    Actually, current sales tax software provided by South Dakota and other states does absolve a merchant for liability if used to calculate sales tax due.
    - DoctorOetker 8y ago
      I agree with this approach! Actually, the federal government should oblige each member state to provide the algorithm, and sign it cryptographically and have it expire every X fixed time interval, and have signed algorithms for the current and next time interval, so that software can automatically fetch and stay up to date. Then the "business opportunity" of navigating FUD evaporates. Currently any such enterprise charging for such a service can spend a fraction of their budget lobbying against harmonization... Since it would be an obligation of the states to the federal government, these algorithms (provided by each member state) should be hosted on a fixed federal government site. Time to start a petition?
      - westurner 8y ago
        This would reduce costs of tax collection for all parties. What is the most convenient format for this layered geographic data? Are the tax district boundary polygons already otherwise available as open data? What do localities call these? Sales tax tables, sales tax database, machine-readable flat files in an open format with a common schema? How much tax revenue should it cost to provide such a service on a national level? States, Counties, Cities, 'Tax Zones'(?) could be required to host tax.state.us.gov or similar with something like Project Open Data JSONLD /data.json that could be aggregated and shared by a server with a URL registry, a task queue service, and a CDN service. While the Bitcoin tax payments bill passed the Senate and House in Arizona, it was vetoed in May 2018. Seminole County in Florida now allows tax payment with crytocurrencies such as Bitcoin: https://cointelegraph.com/news/us-seminole-county-florida-to-accept-crypto-for-tax-payment https://cointelegraph.com/news/us-seminole-county-florida-to... > According to a press release, the county will begin accepting Bitcoin (BTC) and Bitcoin Cash (BCH) to pay for services, including property taxes, driver license and ID card fees, as well as tags and titles. The Seminole County Tax Collector will reportedly employ blockchain payments company BitPay, which will allow the county to receive settlement the next business day directly to its bank account in US dollars. This could also help reduce the costs of tax collection and possibly increase the likelihood of compliance with the forthcoming tax bills!
- waffle_ss 8y ago
  Nonsense. Your accountant isn't even liable if you're audited by the IRS. They're not gonna give a crap you used some rando SaaS
  - DoctorOetker 8y ago
    Which is why the sales tax calculation algorithm should published and cryptographically signed by each state: https://news.ycombinator.com/item?id=17367669 https://news.ycombinator.com/item?id=17367669
    - monetus 8y ago
      I wonder if a single member of congress knows what the words 'cryptographically signed' means...
  - hcknwscommenter 8y ago
    I think you are conflating several different types of liability here. If: i)your accountant messes up due to negligence or worse, ii) you get audited, and iii) it turns out you owe far more than you thought, then you are liable to the Govt for the extra amount owed. The accountant may be liable to you for professional negligence, damages etc. Your damages against the accountant are not the extra amount owed (because it is what you should have paid in the first place), but losses caused by the mistake. In the above scenario, the Gov't may assess a "penalty" and/or "fee" for late payment of taxes, but those fees are usually waived and/or extremely nominal. In the above-scenario, criminal liability simply does not happen. The above is not legal advice.
bdcravens 8y ago
Isn't the same true of TurboTax?

vxNsr 8y ago

This assumes these mom and pop shops have heard of these services. Personally I was helping someone get their little internet store off the ground and it was a huge hassle even with woocommerce.

gowld 8y ago
If they accept credit cards online, their credit card solution ought to include tax management feature. Usually, small shops can ignore stuff like this until they get a bill from an authority, or get big enough for it to matter. As long as they save money for estimated tax liability (approximately equal to their local tax rate), they are fine.
sequoia 8y ago
And what would it look like if Mom & Pop were starting an ice-cream shop instead of an online storefront? Would they _not_ have to pay tax then? I get that being subject to regulation or taxation is more burdensome than not being subject to it, of course that's the case. But it does not follow that requiring sellers to pay sales tax is unduly burdensome. If the underlying complication of tax is the problem, fix that.
- williamscales 8y ago
  > And what would it look like if Mom & Pop were starting an ice-cream shop instead of an online storefront? Would they _not_ have to pay tax then? They would only have to pay sales tax in one tax jurisdiction, the one in which they are physically based and in which they can vote to change those taxes. > But it does not follow that requiring sellers to pay sales tax is unduly burdensome. What follows is requiring sellers to track and remit sales tax in some 10,000 jurisdictions is burdensome.
- rossdavidh 8y ago
  With a brick-and-mortar storefront, they have to figure out one jurisdiction's salestax (rate and what is taxable), their own. That is quite literally orders of magnitude simpler than this.

omni 8y ago

How much do you end up having to pay for TaxJar? It looked to me like the monthly plan was cheap but you'd get totally hosed if you tried to use them to auto-file all the taxes. Are you filing yourself?

jhayward 8y ago

How do you handle knowing what items are taxable vs non-taxable for each item and taxing district? How do you handle customers who are tax-exempt? How do you handle tax holidays and reduced tax on school items in August?