SCOTUS New Ruling on collection of sales tax

[hyepo]

Sooooooo, how far along is the add-on that automatically keeps track of the 10's of 1000's of different sales tax rates all across the USA and automatically applies the correct tax amount to the order... and maintains a report that totals up all the taxes collected for all the different tax zones?

LMAO

 

[burt]

Assuming you only need to collect the STATE sales tax and not individual counties/citys etc...that would be 5 minutes work to set up. 
That also assumes that you can find the exact tax rate per state etc and so on. 

Europeans are very used to setting up multiple tax rates, so it's just the same - instead of countries, think States.

As for remitting the tax after you've collected...that would be outside the scope of the software, obviously.

 

EDIT:

If you have to collect ALL of the applicable sales taxes (state, county, city, district etc)...that would be extremely difficult.

[MrPhil]

4 hours ago, burt said:

If you have to collect ALL of the applicable sales taxes (state, county, city, district etc)...that would be extremely difficult.

We will, although most states only require reporting a total amount of sales and tax collected per tax jurisdiction per tax class, not broken down by components. The real problem is that there are +/- 10000 tax jurisdictions in the US, and every one can do things its own way. The outcry is going to be so great that one of three things will happen in each state:

1. Sales tax will be eliminated, because it's so regressive (the poorer you are, the greater the percentage of your income that goes to sales tax). There will be much rejoicing throughout the land, followed by tears and lamentations when income and property taxes go up.
2. Small businesses will be excluded from online sales tax collection because it's so hard. Slightly larger businesses will then lobby to also be excluded; repeat until no one is collecting and remitting sales tax.
3. The various States will consolidate their tax rules (tax classes, etc.) into a few classes in effect nationwide; they will either have statewide rates or rates by ZIP Code (two things that everyone knows); and there will be a one-stop system to remit collected taxes. Dream on.

I think it's going to take Federal (Congressional) action to set the rules for Number 3 -- who knows how that will play out in court if a state decides it doesn't like the plan. That's the only way I can see it working.

[burt]

13 hours ago, MrPhil said:

The real problem is that there are +/- 10000 tax jurisdictions in the US, and every one can do things its own way.

All the others need to look at WA state.  They have an excellent API to hook into to get the exact rates per zipcode, some years back I made a order_total module hooking into it.  Very simple and effective system. 

If WA can do it...

[MrPhil]

Can such a system handle the load that's going to be placed on it? When it's down (it will be a prime target for DoS attacks) what will merchants do for backup? I'd be more comfortable with a more distributed lookup system.

In most states, tax jurisdictions do not align with ZIP Codes. That is, a ZIP (postal) code may easily span 2 or 3 tax jurisdictions (e.g., across county or city lines), so merchants are specifically warned not to use ZIPs to look up tax rates. However, everyone knows their state and ZIP, but most don't know their county and even fewer know their tax jurisdiction number, so any system will have to be by ZIP (or just statewide). It will have to be up to each state to apportion tax revenue from a ZIP Code to the several tax jurisdictions it overlaps.

[hyepo]

well.. being in California... where our driver's licenses are not even "REAL", i do not see those morons in Sacramento having an efficient API/hook system any time soon, let alone implementation of said system... they cannot even keep the site up and running that registers firearms...and that is all info input.. not even transnational.... the feds need to step in with guidelines.. exempting small businesses... otherwise, states will certainly collect all they can regardless of the burdens... always have... same folks who purport to fight for the 'poor' strap them with the most "tax"... always been the case.    A simple state tax collection would be fine... maybe counties with some programming (would still need an up to date list of tax jurisdictions) but the different municipalities would (and will be) an nightmare... what city would opt out of collecting more tax revenue?  NONE.

[MrPhil]

It HAS to be statewide, or state+ZIP. Very few people, especially in urban areas, know what county they live in, and it's not part of the normal address. You would still be required to verify that the address given IS in that county, otherwise customers would just give the lowest tax rate county in the state! And if you're going to have to go through that trouble, you might as well just geocode the given address and find the county and city location for the tax jurisdiction. I think they should make it simple enough that even the smallest mom & pop operation can easily handle it and shouldn't be exempted. If you start exempting small operations, slightly larger ones will demand to also be exempted, and eventually no one is collecting sales tax!

[bcwright]

Even dealing with just the individual States is a messy problem. Every State has a different classification system for sales tax classes; for example, in Pennsylvania, food and clothing are completely exempt from sales tax, but in North Carolina (where I am), food is taxed at 2% but clothing is classed with everything else like electronics, so they're taxed at 4.75%. Then there's the county tax, which can amount to another 2.75% if you're supposed to collect tax for each county (and there are 100 counties). Fortunately there's no city tax (as there is, for example, in some places in New York). It would seem reasonable that if you're out of the State that you wouldn't need to compute county and city tax, but as far as I know that's not yet clear.

But even just dealing with the States, you would need to set up your shop to classify all of your merchandise correctly for every possible classification for every State - which I'm guessing few small shops are able to do effectively because they don't have all of the rules for all 50 States plus the significant territories like Puerto Rico. It's not just setting 50 rates based on location, it's also setting tax classifications for possibly thousands of items.

I'm sure that there will need to be some kind of clarification  about what the responsibilities of small shop owners are in this area.

Bruce

[MrPhil]

The best solution, which I have suggested to my congresscritter, is to nationally consolidate all the different classification systems into one, with no more than a dozen classes. For example, there might be two classes for clothing: inexpensive clothing and footwear (under $110) and everything else. Pennsylvania would charge 0% on both, NY would charge 0% on the cheap stuff and 4% on the more expensive clothing, North Carolina would charge 4.75% on both. Then each smaller tax division might be allowed to add its normal rate (3% to 4.875% in NY) to either or both classes. There is no sane rationale for making interstate sales (of any size) have to pay attention to thousands of different tax rules, and thus no reason to exempt small sellers.

Regarding smaller (county, city) taxes, as I said before, no one knows exactly what county and city they're in, and it's not part of the mailing address. However, they do know their state and ZIP Code, so taxes would have to be based on that, if not flat rates state-wide. Then it will be up to each state to apportion received tax revenues per tax jurisdiction, based on some formula.

It will take Federal (national) action to implement this -- I just don't see it working out if 45 or so sales tax-charging states have to come to an agreement.

[clustersolutions]

damn, things just gotten more complicated for U.S. showowners. There re companies here that offer that kinda api, I remember reading it when I was working with FBA. At one time in LA there was an additional district tax on top of the state and city tax, it's interesting to see how all these gonna play out...glad I don't ship things anymore. But I guess it may level the playing field a little for brick & mortar stores...