6 ms·

With this new Stripe solution, do you still have to register for licenses to collect tax everywhere and remit the sales tax to various US states and foreign gov

With this new Stripe solution, do you still have to register for licenses to collect tax everywhere and remit the sales tax to various US states and foreign governments? Unless I misunderstand, that still sounds prohibitively onerous for anyone working as a solo dev or very small team..

dstick 5y ago
Not sure how it works in the US but in the EU you don't have to register anything. Just keep tabs of what VAT you collected for what country, and then pay accordingly afterwards. No licenses needed.
- chrismorgan 5y ago
  How do they keep track of who you are? I presume you need a VAT ID of some form? (From https://en.wikipedia.org/wiki/VAT_identification_number#VAT_numbers_of_non-EU_countries https://en.wikipedia.org/wiki/VAT_identification_number#VAT_..., it looks like they’ve crafted it so that many countries’ business numbers can be turned into VAT IDs painlessly, e.g. Canada’s work direct, Australia’s you prefix with a two-digit checksum. I note the conspicuous absence of the USA from the list. I have no idea about US tax.)
- scubakid 5y ago
  Last time I looked into this, it seemed to me like in the US you would need a separate license for each state you collect sales tax in (before collecting any tax)... and naturally, each state has a different licensing process, and some charge fees to register. For small independent projects, it seemed like kind of a nightmare.
  - kevin_thibedeau 5y ago
    You don't have to collect tax for states you don't have a presence in. They have no jurisdiction outside their borders.
    - scubakid 5y ago
      I think due to South Dakota v. Wayfair, states now have more power to define what constitutes "nexus"... so there are all these special rules and thresholds now to keep track of (different for every state) that define whether you have economic nexus and need to collect sales tax there. If you hit the threshold and/or other rules apply, you're obligated to collect sales tax... but of course you can't do this until you have secured a license in that state. This was my read on the situation, but if I'm missing something definitely let me know.
    - comex 5y ago
      That used to be the law, but is no longer as of 2018: https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.
      - R0b0t1 5y ago
        A bad ruling. To let it stand, the more reasonable interpretation is that the purchaser has to remit sales tax to their own state. But it may not stand on further challenge. For example, why should the state the items are leaving not be entitled to sales tax?
        gamblor956 5y ago
        The law already was that the purchaser should remit use tax to the state for purchasers from out-of-state vendors. But compliance was basically non-existent; most people didn't even know that they owed use tax on such sales, much less what rate would apply. Sales tax is basically use tax, but with the burden of compliance placed on the seller. As for why the sellers' state is not entitled to sales tax: in the old-time days, pre-Amazon, this was how many (but not all) tax jurisdictions determined sales tax. (For example, CO's sales tax regime pre-Wayfair used to use the seller's address to determine tax rates.) But the rise of Amazon and online sales meant that sales tax would go to a few jurisdictions where the sellers were located, rather than be spread out where the buyers were located. As sales tax pays for things like roads, etc., that these remote sellers used, many jurisdictions thought this was unfair, and moved to change sales tax sourcing to destination-based sourcing (i.e., to taxing based on the customer's location). And in the Wayfair decision, SCOTUS said this was acceptable. (At the national and international level, destination-based sourcing has been the law for decades, and has been part of America's tax treaties dating back to at least the 1970s.)
kmoriarty 5y ago
Good question! Today you would still need to register yourself, however we tried to make this as easy as possible in two ways: 1) We monitor your transaction and compare them to local thresholds so you know where/when you may need to register: https://stripe.com/docs/tax/set-up#monitoring-your-obligations https://stripe.com/docs/tax/set-up#monitoring-your-obligatio... 2) We provide documentation/links to the exact sites to register: https://stripe.com/docs/tax/registering#list-of-state-and-country-registration-sites https://stripe.com/docs/tax/registering#list-of-state-and-co... In the future though we'd love to also offer registrations on your behalf, this is just the beginning!
- robertlagrant 5y ago
  This is a really useful toolkit. Going much further might make you into the actual legal entity, which could have consequences I don't fully understand (but is perhaps Stripe's plan?)
groundthrower 5y ago
Also wondering about this. Having a one man band b2b only saas, in EU. Have few customers in US to whom I just send an invoice with no tax added. This is what I heard from long ago was how you do. Have never registered any taxes abroad in any country. For EU customers I collect VAT no and do the quarterly report but for all other countries I’ve done nothing. I have basically been doing this wrong then?
- yarcob 5y ago
  As long as you are small enough, that's what everyone does. Pay taxes in your own jurisdiction, ignore foreign taxes. At some point you may reach a limit where you need to file taxes in other places as well. But as a one man operation that sounds unlikely.

dstick 5y ago

Not sure how it works in the US but in the EU you don't have to register anything. Just keep tabs of what VAT you collected for what country, and then pay accordingly afterwards. No licenses needed.

chrismorgan 5y ago
How do they keep track of who you are? I presume you need a VAT ID of some form? (From https://en.wikipedia.org/wiki/VAT_identification_number#VAT_numbers_of_non-EU_countries https://en.wikipedia.org/wiki/VAT_identification_number#VAT_..., it looks like they’ve crafted it so that many countries’ business numbers can be turned into VAT IDs painlessly, e.g. Canada’s work direct, Australia’s you prefix with a two-digit checksum. I note the conspicuous absence of the USA from the list. I have no idea about US tax.)
scubakid 5y ago
Last time I looked into this, it seemed to me like in the US you would need a separate license for each state you collect sales tax in (before collecting any tax)... and naturally, each state has a different licensing process, and some charge fees to register. For small independent projects, it seemed like kind of a nightmare.
- kevin_thibedeau 5y ago
  You don't have to collect tax for states you don't have a presence in. They have no jurisdiction outside their borders.
  - scubakid 5y ago
    I think due to South Dakota v. Wayfair, states now have more power to define what constitutes "nexus"... so there are all these special rules and thresholds now to keep track of (different for every state) that define whether you have economic nexus and need to collect sales tax there. If you hit the threshold and/or other rules apply, you're obligated to collect sales tax... but of course you can't do this until you have secured a license in that state. This was my read on the situation, but if I'm missing something definitely let me know.
  - comex 5y ago
    That used to be the law, but is no longer as of 2018: https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.
    - R0b0t1 5y ago
      A bad ruling. To let it stand, the more reasonable interpretation is that the purchaser has to remit sales tax to their own state. But it may not stand on further challenge. For example, why should the state the items are leaving not be entitled to sales tax?
      - gamblor956 5y ago
        The law already was that the purchaser should remit use tax to the state for purchasers from out-of-state vendors. But compliance was basically non-existent; most people didn't even know that they owed use tax on such sales, much less what rate would apply. Sales tax is basically use tax, but with the burden of compliance placed on the seller. As for why the sellers' state is not entitled to sales tax: in the old-time days, pre-Amazon, this was how many (but not all) tax jurisdictions determined sales tax. (For example, CO's sales tax regime pre-Wayfair used to use the seller's address to determine tax rates.) But the rise of Amazon and online sales meant that sales tax would go to a few jurisdictions where the sellers were located, rather than be spread out where the buyers were located. As sales tax pays for things like roads, etc., that these remote sellers used, many jurisdictions thought this was unfair, and moved to change sales tax sourcing to destination-based sourcing (i.e., to taxing based on the customer's location). And in the Wayfair decision, SCOTUS said this was acceptable. (At the national and international level, destination-based sourcing has been the law for decades, and has been part of America's tax treaties dating back to at least the 1970s.)

kmoriarty 5y ago

Good question! Today you would still need to register yourself, however we tried to make this as easy as possible in two ways: 1) We monitor your transaction and compare them to local thresholds so you know where/when you may need to register: https://stripe.com/docs/tax/set-up#monitoring-your-obligations https://stripe.com/docs/tax/set-up#monitoring-your-obligatio... 2) We provide documentation/links to the exact sites to register: https://stripe.com/docs/tax/registering#list-of-state-and-country-registration-sites https://stripe.com/docs/tax/registering#list-of-state-and-co... In the future though we'd love to also offer registrations on your behalf, this is just the beginning!

robertlagrant 5y ago
This is a really useful toolkit. Going much further might make you into the actual legal entity, which could have consequences I don't fully understand (but is perhaps Stripe's plan?)

groundthrower 5y ago

Also wondering about this. Having a one man band b2b only saas, in EU. Have few customers in US to whom I just send an invoice with no tax added. This is what I heard from long ago was how you do. Have never registered any taxes abroad in any country. For EU customers I collect VAT no and do the quarterly report but for all other countries I’ve done nothing. I have basically been doing this wrong then?

yarcob 5y ago
As long as you are small enough, that's what everyone does. Pay taxes in your own jurisdiction, ignore foreign taxes. At some point you may reach a limit where you need to file taxes in other places as well. But as a one man operation that sounds unlikely.