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Comment by nostromo | Hacker News Reader

I wish this was paired with a provision that required states to simplify their sales tax codes.

I know in Seattle for example food is tax free, unless it's carbonated (which has a surtax), or prepared, or alcoholic, or coffee, or until recently a 'snack' which of course has a lengthy definition on page 3,641 section 4 subpart D...

Even if you make a million dollars in sales, it's hard to imagine keeping up with these regulations.

I'd be especially worried if I was a sharing based company (will Airbnb pay hotel rate taxes, RelayRide car rental rates? Who pays, the owner or the company?)

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This is paired with a provision that states must simplify their sales tax codes before they can collect from out-of-state sellers, though it's not hard to see how they could stay within the requirements of the bill and still have overly complicated rules.

I wrote a summary a few weeks ago:

http://www.dangrossman.info/2013/04/24/what-startups-need-to...

It's not that simple. http://online.wsj.com/article/SB1000142412788732362800457845...

It's very clear that remote sellers cannot be audited by any entity except that one per state which will be created.

> Such authority shall commence...after the date that the State...implements each of the following minimum simplification requirements: a single audit of a remote seller for all State and local taxing jurisdictions within that State

Local municipalities have no legal jurisdiction to tax entities outside their boundaries, and this bill does nothing to change that.

"Local municipalities have no legal jurisdiction to tax entities outside their boundaries"

Neither do states, but that's not stopping them from trying.

Your comment demonstrates a fundamental lack of understanding of the question at stake here.

The issue is not whether the state can tax entities outside their boundaries. The issue is when the state can ask companies headquartered elsewhere to assist in the collection of taxes owed to the state by citizens of said state.

In legal theory the taxes are owed regardless of whether third parties like Amazon assist in their collection. In practice they don't get collected unless it is done by those third parties. (Because people don't volunteer that information, and the state has no way to prove who bought what for how much without paying taxes.)

Until this bill, the question centered on how broadly states could define companies headquartered elsewhere as having a business presence in the state, and therefore within the state's power to compel. But this bill is being passed by Congress under the Commerce Clause, and there are no legal questions about whether sufficient legal authority exists for this purpose.

Oh, I understand the issue thoroughly, thanks, given that I pay Illinois use tax every year.

That's between me and Illinois, though. I don't see why some company that's not even in Illinois (and that thus receives no Illinois services of any kind) should have to take the hit to comply with Illinois law.

Its really just a software problem. The vast majority of products made in the US which you describe all have unique identification numbers called UPCs, Universal Product Codes. With the exception of in house made items like custom baked goods almost every product has a universal code. That code can easily be linked to a database which identifies its characteristics by state and county etc.

Once you have the characteristics by state/county/etc. (how the product is described legally), you can then cross reference it to where it is sold to and calculate a tax.

Is it a lot of data? Absolutely, but it is doable and the person/team who does it is sure to have a fairly large business charging companies who want their products sold online and companies using their system.

[ADDED] There will likely be multiple providers which should drive the price down and economic profits to zero. There is no reason why you would pick 1 tax calculator over another except price.

Most foods won't be an issue since they aren't sold as much online.

If you are a retailer of a new item with low volume, that is really where this is a problem. Once you make over a million a year in sales, you will likely have to hire an expensive consultant to figure out your tax implications.

[Additionally Added] I agree that it will be a challenging transition. But, in 10 years, this will be a non-issue.

Amazon will be fine, yes.

I'm more worried about the small retailer that sells $1m in goods and pockets $150k, who now needs to buy expensive tax calculation software and pay taxes in 50 states.

As a developer at such a retailer, all I can say is: ugh. I hope this dies or is vastly simplified in the house.

It will likely come bundled with the credit card software they're already paying for.

It's already a common feature of retail PoS software, at least. Retailers with many physical stores have to make sure different Safeway or Barnes&Noble stores charge the proper sales-tax rates for each location, and getting that right is often outsourced to the software provider.

I work with UPCs a lot. We're regularly disappointed with how FEW things have UPCs. There are whole categories — foods, apparel, etc. — without UPCs, and other segments - old books, beer, wine - where UPCs aren't actually used for unique products, but instead for things like brands or prices.

Add to this that state and local laws change frequently, and that they aren't machine-readable (and, even if the rules were easily accessible, the rules frequently would require a lawyer to parse, and might change based on where the goods are sold). It is a very thorny problem.

To that end it's also a data problem. Getting 100% accurate unique identifiers like UPC, MPN or ISBN for such items can be a challenge for online retailers. Also the notion of smaller retailers who fall under this legislation having to (pay someone to) modify their systems to support these third party services to calculate the collect tax is also kind of a bummer.

These issues are mostly resolvable with time and money. Regardless, the transition is going to be rough, in my view.

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