Got it thanks. A compliant service cannot just go by zip. I write a lot of web services and this one definitely sounds like an interesting challenge. I think for such a service to keep up with all the tax changes and jurisdiction minutiae it would need to be crowd sourced. In order for such a crowd sourcing to be accurate (not sabotaged or sloppy) it would have to validate and reward the people who add the tax entries and write the 50+ automated filing add-ons.
Ideally it would be a cooperative effort by vendors who get to use the service as their reward while vendors who do not contribute would pay some of the upkeep. Although web service upkeep is getting cheaper all the time, the challenge here is the messy and inconsistent tax information and e-filing systems in the 50 states.
But a further complication is that simply copying Avalara's information is likely to violate their copyrights, and that would be hard to detect. But the biggest challenge is the filing not the calculation for each transaction
Yep - you get it now. The data has to be VERY granular - down to the street address - so county can be determined, or city within county.
If there were such a “golden reference” database the calculations are trivial. I could have a system that does a service-call, submitting an address with zip, and receiving back a county and/or city, plus rate to apply. My system would then have to store the info within the transaction that would be necessary to aggregate and report the data on the required frequencies. As I subscribe to a system, it would be up to my vendor to make such changes (which they’d be happy to charge for!).
But, in addition to what you note in the difficulties of filing and remitting, you still have the issue of taxable/non-taxable sales. While most of my physical products would be taxable, some of my clients are tax-exempt entities - whether because they’re agencies of their states, or because they’re re-sellers and therefore exempt. Until last year, “services” were not taxable in NC - now they are. I imagine that they are in some other areas of the country, but not in others.
To keep all of this straight, Minimally, I would have to have an indicator in my product database - at the product level - as to whether it was taxable in each state. That’s (at least) 50 new data-elements per-product to enter and maintain.
And all of this still glosses over the ruling being bogus overall (IMHO), as implementation along the lines of their reasoning STILL is a violation of the Commerce Clause.
Fortunately it seems it will be a long while before anything comes of this. The pressure will be on Congress to deal with it through legislation, as it is their explicit responsibility to regulate commerce.