6 ms·

Something like ten years ago now, Washington State changed their sales tax requirements in a way that required the seller to look up the four-digit rate code of

Something like ten years ago now, Washington State changed their sales tax requirements in a way that required the seller to look up the four-digit rate code of the buyer, both for determining the rate to charge and later for remitting to the state. The quarterly file they provide with this information is ~150000 rows. Prior to that date, you just reported for the jurisdiction in which the business was registered. Between this and similarly far-reaching laws (e.g., GDPR), it's becoming increasingly burdensome for small players to the point where secondary services like Avalara are effectively required.

panda888888 8y ago
Yep. The most annoying part is that tax jurisdictions don't correspond to ZIP codes. If they did, this would be so much easier.
- eric_h 8y ago
  As someone who grew up in a house who's mailing address and zip code were for a different town and county from the actual physical location of the house (it was just past the border) - I can't even begin to imagine how to actually do this completely correctly.
  - delinka 8y ago
    Apple has asked me several times in the past for online purchases. I enter a ZIP code, they do some lookup and ask me to choose the county I live in from a list of three. I choose, and based on that they calculate tax.
    - CodeWriter23 8y ago
      That’s great until one has customers living in Los Angeles City vs. Los Angeles County. The city charges its own sales and use tax, I believe it’s an additional 0.25%. And then factor in “Enterprise Zones” where even different portions of cities have different tax rates.
      - lovich 8y ago
        There buildings where the taxes change depending on where in the building you are in. The level of complexity surrounding taxes is amazing
        zymhan 8y ago
        Duty-free for example!
  - dumbfoundded 8y ago
    Honestly, the state doesn't expect anyone to get this completely right except the largest companies. If you make a good faith effort to comply with laws, in the vast majority of cases, you're fine.
    - rbritton 8y ago
      I don't find that to be a valid excuse. If a law is worded in such a way that companies or individuals will frequently get it wrong, it's probably a bad law. Call me paranoid, but that seems like it just sets a person up with an easy reason to audit.
      - dumbfoundded 8y ago
        It's not an excuse. It's just that laws are enforced by people. Think of what happens if you get caught speeding. Does everyone always get a ticket every time they speed? Of course not. Even when you get pulled over you can behave politely and maybe get off with a warning. This is how every law and regulation works.
    - munk-a 8y ago
      No! Selective enforcement is terrible, if there's a revenue threshold bake it into the law, otherwise you'll see large companies crying foul on some up-and-coming competitor that then gets bogged down in legislation, along with all the other terrible thing inherit in selectively enforced laws.
      - bmelton 8y ago
        > if there's a revenue threshold bake it into the law There's no real winning there either. If you bake the threshold into the law, some companies may game the system such that, if the cost of total compliance is x, and we're revenue range of x, give or take, to just take a little less money to stay under the threshold. Not that I'm suggesting that is something that we should care about, or even consider a majority worry, but hard and fast cliffs lead to gamesmanship, or worse, misaligned incentives (such that it's non-beneficial for those on welfare to work if it puts them over a given benefits threshold.) On the whole, I agree that selective enforcement is bad, if not wholly terrible, but its absence isn't a panacea either.
- sseveran 8y ago
  That's because zip codes don't really align with anything in the general case. There are even zip codes that span multiple states. https://gis.stackexchange.com/questions/53918/determining-which-us-zipcodes-map-to-more-than-one-state-or-more-than-one-city https://gis.stackexchange.com/questions/53918/determining-wh...
  - bmelton 8y ago
    Is that true of the +4 zip codes as well?
  - risotto_groupon 8y ago
    There are even imaginary zip codes... as in they are real zip codes but don't map to physical space.
test6554 8y ago
It sounds like Avalara costs $50 per year for small businesses, but scales up for larger companies. So compliance is trivial if it truly works.
- omfg 8y ago
  Unfortunately they don’t have transparent pricing. So it’s a bit of a mystery. We were in the middle of getting a quote but then found TaxJar thanks to this thread and are going to try that. I prefer the pricing being up front.
  - imajes 8y ago
    FWIW, I can tell you that taxjar is pretty light on the "I've collected taxes, now what?" side. Avalara might be a BigCo but they have their stuff together, and it works at scale for transactions (especially when dealing with refunds or discounts that need to reflect Sales Tax differentially.... oy)
    - jakejohnson 8y ago
      Can you expand on why TaxJar seems lighter after collecting sales tax? We have a fully automated reporting and filing solution that works at scale for over 10k merchants. Disclaimer: I work at TaxJar, just curious to hear your feedback. Thanks!
      - imajes 8y ago
        Yeah, i had a client using it who found that being able to get the data into a reporting scenario so they could file was hard. Mostly it surrounded reconciliation and an ability to gain confidence that the numbers reflected actual transaction volume (it is a perishable good, so there was a reasonable quantity of discounts and refunds as delivery vendors missed targets...) I'd also say I have a bias, as I've also used avalara a couple times before and found it to be quite a bit superior in making it seem quite a bit more effortless -- taxation is so byzantine I don't have any expectation that I could understand it, so I want to trust that the provider i use is very confident they do. not sure if that helps a lot, but it was also a few months ago ;)
jMyles 8y ago
> Between this and similarly far-reaching laws (e.g., GDPR), it's becoming increasingly burdensome for small players So you're saying that these laws are achieving their intended purpose?
- bostonscott 8y ago
  Bingo. This is precisely how big companies leverage big government to prevent challenges from threatening their business model. Amazon is investing its money into lobbying for "Main-street Fairness" ... https://www.reuters.com/article/usa-amazon-lobbying-idUSL1N1KB1N6 https://www.reuters.com/article/usa-amazon-lobbying-idUSL1N1...
inferiorhuman 8y ago
> Between this and similarly far-reaching laws (e.g., GDPR), it's becoming increasingly burdensome for small players to the point where secondary services like Avalara are effectively required. Sounds like a good justification for a federal GST instead of the patchwork of (hyper) local sales taxes. I fully understand why that will never happen in the United States (states' rights), and think that it's the tax patchwork that's the problem not the requirement to collect taxes itself.
- kccqzy 8y ago
  Local sales taxes are sometimes earmarked for a specific purpose that improves the local community. For example recently voters in the Los Angeles county approved a sales tax increase to fund new Metro lines [0]. It seems fair that since this Metro line primarily benefits residents in this region, this additional sales tax should only be charged when one buys products in this region (primarily residents). Concentrating all the money at the federal level and then redistributing doesn't seem very fair. [0]: https://ballotpedia.org/Los_Angeles_County,_California,_Sales_Tax,_Measure_M_(November_2016) https://ballotpedia.org/Los_Angeles_County,_California,_Sale...
  - deleted 8y ago
    [deleted]
- slavik81 8y ago
  My impression from browsing these discussions is that the set of rules governing sales taxes even in a single state are sometimes more complicated than those for all of Canada. It's pretty incredible to see all the fancy tax rules.

panda888888 8y ago

Yep. The most annoying part is that tax jurisdictions don't correspond to ZIP codes. If they did, this would be so much easier.

eric_h 8y ago
As someone who grew up in a house who's mailing address and zip code were for a different town and county from the actual physical location of the house (it was just past the border) - I can't even begin to imagine how to actually do this completely correctly.
- delinka 8y ago
  Apple has asked me several times in the past for online purchases. I enter a ZIP code, they do some lookup and ask me to choose the county I live in from a list of three. I choose, and based on that they calculate tax.
  - CodeWriter23 8y ago
    That’s great until one has customers living in Los Angeles City vs. Los Angeles County. The city charges its own sales and use tax, I believe it’s an additional 0.25%. And then factor in “Enterprise Zones” where even different portions of cities have different tax rates.
    - lovich 8y ago
      There buildings where the taxes change depending on where in the building you are in. The level of complexity surrounding taxes is amazing
      - zymhan 8y ago
        Duty-free for example!
- dumbfoundded 8y ago
  Honestly, the state doesn't expect anyone to get this completely right except the largest companies. If you make a good faith effort to comply with laws, in the vast majority of cases, you're fine.
  - rbritton 8y ago
    I don't find that to be a valid excuse. If a law is worded in such a way that companies or individuals will frequently get it wrong, it's probably a bad law. Call me paranoid, but that seems like it just sets a person up with an easy reason to audit.
    - dumbfoundded 8y ago
      It's not an excuse. It's just that laws are enforced by people. Think of what happens if you get caught speeding. Does everyone always get a ticket every time they speed? Of course not. Even when you get pulled over you can behave politely and maybe get off with a warning. This is how every law and regulation works.
  - munk-a 8y ago
    No! Selective enforcement is terrible, if there's a revenue threshold bake it into the law, otherwise you'll see large companies crying foul on some up-and-coming competitor that then gets bogged down in legislation, along with all the other terrible thing inherit in selectively enforced laws.
    - bmelton 8y ago
      > if there's a revenue threshold bake it into the law There's no real winning there either. If you bake the threshold into the law, some companies may game the system such that, if the cost of total compliance is x, and we're revenue range of x, give or take, to just take a little less money to stay under the threshold. Not that I'm suggesting that is something that we should care about, or even consider a majority worry, but hard and fast cliffs lead to gamesmanship, or worse, misaligned incentives (such that it's non-beneficial for those on welfare to work if it puts them over a given benefits threshold.) On the whole, I agree that selective enforcement is bad, if not wholly terrible, but its absence isn't a panacea either.
sseveran 8y ago
That's because zip codes don't really align with anything in the general case. There are even zip codes that span multiple states. https://gis.stackexchange.com/questions/53918/determining-which-us-zipcodes-map-to-more-than-one-state-or-more-than-one-city https://gis.stackexchange.com/questions/53918/determining-wh...
- bmelton 8y ago
  Is that true of the +4 zip codes as well?
- risotto_groupon 8y ago
  There are even imaginary zip codes... as in they are real zip codes but don't map to physical space.

test6554 8y ago

It sounds like Avalara costs $50 per year for small businesses, but scales up for larger companies. So compliance is trivial if it truly works.

omfg 8y ago
Unfortunately they don’t have transparent pricing. So it’s a bit of a mystery. We were in the middle of getting a quote but then found TaxJar thanks to this thread and are going to try that. I prefer the pricing being up front.
- imajes 8y ago
  FWIW, I can tell you that taxjar is pretty light on the "I've collected taxes, now what?" side. Avalara might be a BigCo but they have their stuff together, and it works at scale for transactions (especially when dealing with refunds or discounts that need to reflect Sales Tax differentially.... oy)
  - jakejohnson 8y ago
    Can you expand on why TaxJar seems lighter after collecting sales tax? We have a fully automated reporting and filing solution that works at scale for over 10k merchants. Disclaimer: I work at TaxJar, just curious to hear your feedback. Thanks!
    - imajes 8y ago
      Yeah, i had a client using it who found that being able to get the data into a reporting scenario so they could file was hard. Mostly it surrounded reconciliation and an ability to gain confidence that the numbers reflected actual transaction volume (it is a perishable good, so there was a reasonable quantity of discounts and refunds as delivery vendors missed targets...) I'd also say I have a bias, as I've also used avalara a couple times before and found it to be quite a bit superior in making it seem quite a bit more effortless -- taxation is so byzantine I don't have any expectation that I could understand it, so I want to trust that the provider i use is very confident they do. not sure if that helps a lot, but it was also a few months ago ;)

jMyles 8y ago

> Between this and similarly far-reaching laws (e.g., GDPR), it's becoming increasingly burdensome for small players So you're saying that these laws are achieving their intended purpose?

bostonscott 8y ago
Bingo. This is precisely how big companies leverage big government to prevent challenges from threatening their business model. Amazon is investing its money into lobbying for "Main-street Fairness" ... https://www.reuters.com/article/usa-amazon-lobbying-idUSL1N1KB1N6 https://www.reuters.com/article/usa-amazon-lobbying-idUSL1N1...

inferiorhuman 8y ago

> Between this and similarly far-reaching laws (e.g., GDPR), it's becoming increasingly burdensome for small players to the point where secondary services like Avalara are effectively required. Sounds like a good justification for a federal GST instead of the patchwork of (hyper) local sales taxes. I fully understand why that will never happen in the United States (states' rights), and think that it's the tax patchwork that's the problem not the requirement to collect taxes itself.

kccqzy 8y ago
Local sales taxes are sometimes earmarked for a specific purpose that improves the local community. For example recently voters in the Los Angeles county approved a sales tax increase to fund new Metro lines [0]. It seems fair that since this Metro line primarily benefits residents in this region, this additional sales tax should only be charged when one buys products in this region (primarily residents). Concentrating all the money at the federal level and then redistributing doesn't seem very fair. [0]: https://ballotpedia.org/Los_Angeles_County,_California,_Sales_Tax,_Measure_M_(November_2016) https://ballotpedia.org/Los_Angeles_County,_California,_Sale...
- deleted 8y ago
  [deleted]
slavik81 8y ago
My impression from browsing these discussions is that the set of rules governing sales taxes even in a single state are sometimes more complicated than those for all of Canada. It's pretty incredible to see all the fancy tax rules.