Diggin' technology every day

June 23, 2011

Collecting taxes an Administrative nightmare?

Filed under: General — Nate @ 1:13 am

[sorry for the rash of non technical posts recently there just hasn’t been much going on in the tech world that has been interesting to me recently]

This has been pissing me off for a long time. Amazon trying to evade collecting taxes on behalf of states. I tried finding a report of this in text form but could only find one that had these words in video form from CNBC (yeah I’m watching CNBC shows my Tivo recorded at noon today at 1AM)

Amazon says the real issue is the administrative nightmare of collecting different rates for different states

That has got to be the most stupid excuse I have ever heard in my life. There is no administrative nightmare. There are several companies out there that specialize in exactly that sort of information so you don’t have to worry about keeping track of it yourself. I was using one such system going back as far as 2003.

It was called Taxware, and it handled everything for us (the link points to ADP, whom I assume acquired the company at some point, I don’t recall ADP being associated with Taxware at the time, assuming I have the right Taxware, it was a long time ago). Taxes can get pretty complicated, but complication is not an excuse when you have something like Taxware doing the hard work for you.

While my memory is foggy on the details back in the day I do recall coming across some very interesting tax things that went on at the time, and that Taxware handled just fine. I’m talking about tax breaks for certain kinds of products that only lasted a certain amount of time for example, and these could vary on a city by city or county by county basis it was that detailed! Because of those things you really had to stay on your toes with the data file updates which came regularly.

I have no doubt there are other platforms and services like Taxware.

If the small startup I was at at the time could calculate and collect taxes, there’s no excuse for the bigger companies to not be able to do that other than they want the competitive edge against local businesses in the state that are forced to collect taxes.

I can understand a small mom & pop operation  (maybe sub $300k in revenue a year) not having the resources to collect taxes, but even for them it wouldn’t surprise me if there was a SaaS offering out there that did it. Maybe they’d call it SpeedTax or something so it sounds fast and easy.

Most people don’t realize that we also have use taxes as well, in the event you buy something from out of state (assuming your state has sales taxes), and they ship the product to you without collecting taxes, or if you go out of state, buy it, and bring it back (e.g. those living on the border between WA and OR that exploit the tax conditions between the two states (WA having no income tax and OR having no sales tax)), you’re technically not off the hook for taxes on those products. Though enforcement has been an issue and your only likely to get caught if you are doing large scale evasion.

One thing I do agree with Amazon with though is we should have a national system, some law that removes all remaining avenues of escape or excuses for Amazon (and others) for collecting the taxes that they’re supposed to collect.

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