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1. Congress does not have that power, as it would interfere with the states' control of in-state commerce. They could however make that a requirement for requir

1. Congress does not have that power, as it would interfere with the states' control of in-state commerce. They could however make that a requirement for requiring out-of-state sellers to comply with sales tax. 2. Same as #1. 3. Rates for sales tax generally change every few years as it requires an unbelievably large amount of notification to sellers, service providers, etc. Where sales tax rates change faster than that, it is usually part of a pre-planned and pre-published change in rates occurring over several years. A sales tax rate changing annually is actually fairly uncommon; a sales tax rate changing more frequently than annually (absent special circumstances like COVID19 incentive rates) is extremely rare. 4. This is basically the purpose of the Streamlined Sales Tax, which is an initiative of over two dozen states to streamline sales tax compliance: only a single return is required and it covers all of the member states. However, it is voluntary. Note that your suggestion for payment is unfeasible, since it would require each payment to also include the tax liability data for every other state, and each state would have to set up a separate bureaucracy to handle money transfer. It's faster and more efficient for taxpayers and states to simply have the taxpayer use existing payment mechanisms to pay each state separately. On the taxpayer side, it's literally seconds more work if you're using a unified tax system (like the SST).

tzs 5y ago
1. Oops. I forgot to say that this was only to apply for sales taxes on out-of-state sellers. 2. I did remember to mention that for #2. 3. The rates that apply to a particular location in a state might change infrequently, but there are a lot of locations, so even if each location's rates change infrequently there can still be a lot of rate changes within the state each quarter. For example, in my state (Washington), there are ~1 million 9 digit zip codes listed in the rate data the state makes available. Here is how many of those areas had rate changes compared to the previous quarter starting from 2020: 2020q1 14930 changed 2020q2 121464 changed 2020q3 9084 changed 2020q4 1779 changed 2021q1 185365 changed 2021q2 115306 changed (This is only counting cases where the zip exists in the rate tables for two consecutive quarters. There are also zips being added and removed which I'm ignoring). In those 6 quarters many places actually changed more than once, the most extreme being 98520-6503 which changed every quarter. 2019q4 8.98% 2020q1 8.80% 2020q2 8.90% 2020q3 9.08% 2020q4 8.90% 2021q1 9.08% 2021q2 8.90% Among all the places whose rate changed sometime in 2020 or 2021 (so far): 436523 changed 1 time 4533 changed 2 times 654 changed 3 times 84 changed 4 times 7 changed 5 times 1 changed 6 times 4. SST would be great if every state did it, but as you note it is voluntary, and as you noted in other comments I believe several states apparently have no interest in joining. If the Feds did it, they could make it mandatory, and they could make it simpler (such as making it purely zip code base5 (hopefully 5 digit only) instead of address based). With it zip based and updated at most once per quarter, almost all the complexity of dealing with finding rates go away. Heck, I would probably remove the address entry fields from our shopping cart because we sell downloadable goods and tech support for those goods. The only reason we have to ask for address is for sales tax lookup. What I'm basically suggesting is something similar to the EU's VAT MOSS system. Here's how we deal with VAT for our EU sales. (1) It is one rate per country. I had a local DB with the rates. (2) Once a quarter I make a CSV file that lists country, our sales in that country, the VAT rate of that country, and how much tax we collected. (3) Once a quarter someone in ops uploads that CSV to the Irish tax authorities and we pay them the total of all EU VAT we owe for that quarter. (4) The Irish tax authorities forward the data to the other EU countries along with the tax owed (logically...I'd assume that physically they do something like net out things first. Just as we pay our Italian and German VAT through Ireland, there are others paying their Irish VAT through Germany or Italy, and there is no need to have say Ireland pay Germany at the same time Germany pays Ireland). I don't see why the states could not do something similar, so that I just send a CSV of state, zip, sales, rate, amount collected to one state along with the total tax collected and let them distribute it. Maybe have the Feds set up a clearinghouse for the states to use that actually deals with netting things out and settling between the states. Might as well then go one step further hand have the sellers just upload directly to the clearinghouse.
- tzs 5y ago
  Addendum: I got curious about that place that changed every quarter, zip code 98520-6503. That zip covers the odd addresses in the 101-199 address range of E Wishkah ST in Aberdeen WA. The even side of that block is zip code 98520-6508 and only suffered one rate changed in that time. The 200 block odd side changed twice, the 200 block even side changed once. Going the other way from the 100 block of E Wishkah, the odd side of 100 W changed once, and the even side twice.
- gamblor956 5y ago
  3. WA DOR publishes all sales tax rate change notices on their website. https://dor.wa.gov/taxes-rates/sales-and-use-tax-rates/local-sales-tax-change-notices https://dor.wa.gov/taxes-rates/sales-and-use-tax-rates/local... In 2020, there were fewer than a 2 dozen rate changes throughout the entire year at the local level, none at the state level, and certainly not any rate changes in a single tax locale occurring multiple times during the year at any level. And this was verified by running tax rate reports for the state of WA in Avalara for each quarter in 2020. I understand the point you're trying to make, but you're not going to win this argument by making up such blatant falsehoods. (Note that I actually handle the sales tax compliance for my company, including the state of WA, and I am definitely more familiar with sales tax rate changes than you are.) 4. The Feds do not have the power to require states to join the SST as it would violate the states' right to control intrastate commerce. 4a. Zip-coded based taxation is not sufficiently granular. For example, a single zip code in LA can contain multiple municipalities. A number of zip codes cross county and state lines. (9-digit zip codes are more granular, but only areas with sufficient mail volume are assigned the extra 4 digits.) 4b. I don't know what is behind your fascination with updating sales tax rates every quarter. Sales tax rates are generally updated every few years for any given tax location. It only seems like they update more frequently than that because you are conflating local tax jurisdictions with state-level jurisdictions. 4c. I know how VATMOSS works; as I have stated elsewhere I am a tax professional and handle indirect compliance functions for my company. There is not a single VAT rate per country; there are 3 or more rates, corresponding to the different VAT classifications of goods. Most EU countries have 3 rates; during COVID several of them had as many as 7 rates (as a result of short-term discounted rates on certain types of goods and services). Furthermore, only a limited number of VAT-subject digital goods and services are handled by the VAT MOSS system; physical goods are not VAT MOSS eligible, and classification/taxation of physical goods is 99% of the complexity of indirect tax regimes. Additionally, the EU is legally and structurally fundamentally different from the U.S. VAT MOSS is possible in the EU because the member nations are bound to participate in EU economic initiatives as a condition of being a member of the EU (see, for example, the issues leading to Brexit). No similar legal arrangement exists between the American states; moreover, the U.S. Constitution does not grant the central/federal government the power to control commerce within a state. It is simply not possible to have something like the VATMOSS in the U.S. It would require significant changes to the basic structure of American government. The best we'll get is the SST, and it's very unlikely that states like CA and NY will ever agree to give up control of their own tax systems to a system run by the Midwestern and Southeastern states. Indeed, the SST exists primarily because most out-of-state sellers to these states would not sell enough to reach the nexus thresholds and so those sales would not be subject to sales tax; the SST is the carrot to get sellers to agree to handle sales tax compliance, and that is why it is mandatory to agree to sales tax for all SST member states as a condition of using the SST. (For example, without getting into specifics, my company's sales to all SST member states combined is less than the sales to CA, or NY, or FL, or CO, or TX, or IL.)

tzs 5y ago

1. Oops. I forgot to say that this was only to apply for sales taxes on out-of-state sellers. 2. I did remember to mention that for #2. 3. The rates that apply to a particular location in a state might change infrequently, but there are a lot of locations, so even if each location's rates change infrequently there can still be a lot of rate changes within the state each quarter. For example, in my state (Washington), there are ~1 million 9 digit zip codes listed in the rate data the state makes available. Here is how many of those areas had rate changes compared to the previous quarter starting from 2020: 2020q1 14930 changed 2020q2 121464 changed 2020q3 9084 changed 2020q4 1779 changed 2021q1 185365 changed 2021q2 115306 changed (This is only counting cases where the zip exists in the rate tables for two consecutive quarters. There are also zips being added and removed which I'm ignoring). In those 6 quarters many places actually changed more than once, the most extreme being 98520-6503 which changed every quarter. 2019q4 8.98% 2020q1 8.80% 2020q2 8.90% 2020q3 9.08% 2020q4 8.90% 2021q1 9.08% 2021q2 8.90% Among all the places whose rate changed sometime in 2020 or 2021 (so far): 436523 changed 1 time 4533 changed 2 times 654 changed 3 times 84 changed 4 times 7 changed 5 times 1 changed 6 times 4. SST would be great if every state did it, but as you note it is voluntary, and as you noted in other comments I believe several states apparently have no interest in joining. If the Feds did it, they could make it mandatory, and they could make it simpler (such as making it purely zip code base5 (hopefully 5 digit only) instead of address based). With it zip based and updated at most once per quarter, almost all the complexity of dealing with finding rates go away. Heck, I would probably remove the address entry fields from our shopping cart because we sell downloadable goods and tech support for those goods. The only reason we have to ask for address is for sales tax lookup. What I'm basically suggesting is something similar to the EU's VAT MOSS system. Here's how we deal with VAT for our EU sales. (1) It is one rate per country. I had a local DB with the rates. (2) Once a quarter I make a CSV file that lists country, our sales in that country, the VAT rate of that country, and how much tax we collected. (3) Once a quarter someone in ops uploads that CSV to the Irish tax authorities and we pay them the total of all EU VAT we owe for that quarter. (4) The Irish tax authorities forward the data to the other EU countries along with the tax owed (logically...I'd assume that physically they do something like net out things first. Just as we pay our Italian and German VAT through Ireland, there are others paying their Irish VAT through Germany or Italy, and there is no need to have say Ireland pay Germany at the same time Germany pays Ireland). I don't see why the states could not do something similar, so that I just send a CSV of state, zip, sales, rate, amount collected to one state along with the total tax collected and let them distribute it. Maybe have the Feds set up a clearinghouse for the states to use that actually deals with netting things out and settling between the states. Might as well then go one step further hand have the sellers just upload directly to the clearinghouse.

tzs 5y ago
Addendum: I got curious about that place that changed every quarter, zip code 98520-6503. That zip covers the odd addresses in the 101-199 address range of E Wishkah ST in Aberdeen WA. The even side of that block is zip code 98520-6508 and only suffered one rate changed in that time. The 200 block odd side changed twice, the 200 block even side changed once. Going the other way from the 100 block of E Wishkah, the odd side of 100 W changed once, and the even side twice.
gamblor956 5y ago
3. WA DOR publishes all sales tax rate change notices on their website. https://dor.wa.gov/taxes-rates/sales-and-use-tax-rates/local-sales-tax-change-notices https://dor.wa.gov/taxes-rates/sales-and-use-tax-rates/local... In 2020, there were fewer than a 2 dozen rate changes throughout the entire year at the local level, none at the state level, and certainly not any rate changes in a single tax locale occurring multiple times during the year at any level. And this was verified by running tax rate reports for the state of WA in Avalara for each quarter in 2020. I understand the point you're trying to make, but you're not going to win this argument by making up such blatant falsehoods. (Note that I actually handle the sales tax compliance for my company, including the state of WA, and I am definitely more familiar with sales tax rate changes than you are.) 4. The Feds do not have the power to require states to join the SST as it would violate the states' right to control intrastate commerce. 4a. Zip-coded based taxation is not sufficiently granular. For example, a single zip code in LA can contain multiple municipalities. A number of zip codes cross county and state lines. (9-digit zip codes are more granular, but only areas with sufficient mail volume are assigned the extra 4 digits.) 4b. I don't know what is behind your fascination with updating sales tax rates every quarter. Sales tax rates are generally updated every few years for any given tax location. It only seems like they update more frequently than that because you are conflating local tax jurisdictions with state-level jurisdictions. 4c. I know how VATMOSS works; as I have stated elsewhere I am a tax professional and handle indirect compliance functions for my company. There is not a single VAT rate per country; there are 3 or more rates, corresponding to the different VAT classifications of goods. Most EU countries have 3 rates; during COVID several of them had as many as 7 rates (as a result of short-term discounted rates on certain types of goods and services). Furthermore, only a limited number of VAT-subject digital goods and services are handled by the VAT MOSS system; physical goods are not VAT MOSS eligible, and classification/taxation of physical goods is 99% of the complexity of indirect tax regimes. Additionally, the EU is legally and structurally fundamentally different from the U.S. VAT MOSS is possible in the EU because the member nations are bound to participate in EU economic initiatives as a condition of being a member of the EU (see, for example, the issues leading to Brexit). No similar legal arrangement exists between the American states; moreover, the U.S. Constitution does not grant the central/federal government the power to control commerce within a state. It is simply not possible to have something like the VATMOSS in the U.S. It would require significant changes to the basic structure of American government. The best we'll get is the SST, and it's very unlikely that states like CA and NY will ever agree to give up control of their own tax systems to a system run by the Midwestern and Southeastern states. Indeed, the SST exists primarily because most out-of-state sellers to these states would not sell enough to reach the nexus thresholds and so those sales would not be subject to sales tax; the SST is the carrot to get sellers to agree to handle sales tax compliance, and that is why it is mandatory to agree to sales tax for all SST member states as a condition of using the SST. (For example, without getting into specifics, my company's sales to all SST member states combined is less than the sales to CA, or NY, or FL, or CO, or TX, or IL.)