Your first question: Can you turn off tax calculation in the non-streamlined states so that a seller that voluntarily signs up for TaxCloud is not burdened with the multitude of remittances to the various jurisidictions?

Answer: Yes! Within TaxCloud you can easily enable or disable sales tax calculation for any non-Streamlined states.

Your next question: Noting that Colorado, as well as Arizona, Alabama, Louisiana and potentially Chicago; all require remittance directly to the local jurisdiction. Possibly, how many jurisdictions would a seller have to file in?

Answer: You can decide. TaxCloud does not change any sales tax collection and reporting obligations you already have. If you are not currently required to collect and report in those non-Streamlined states, that will not change once you sign up for TaxCloud — as we said above, you control which states you enable TaxCloud for. If you are in a non-Streamlined state, TaxCloud will actually make your reporting obligation much easier because it automatically prepares monthly reports with jurisdictional details, which you can use to simplify your sales tax return preparations for non-Streamlined jurisdictions. And, as always, for the 24 Streamlined states, TaxCloud can automatically handle all your filings and remittance for you, absolutely for free.

Your next question: What are the implications to sellers for collecting and not propertly remitting these taxes? Is their officer/owner liability for improper or unremitted taxes?

Answer: This is pretty simple — if a seller collects sales tax from their customers, they must remit those sales tax proceeds to the proper jurisdiction. Failure to remit collected sales tax is a felony.

Your next question: How do you deal with customers with exemptions? Do you maintain the exemption certificates or does the seller have to collect and maintain the certificates?

Answer: TaxCloud includes a complete tax exemption certificate management subsystem that allows your customers to enter exemption details, which are then securely managed and retained by TaxCloud — you don’t have to store or retain any of the taxpayers’ sensitive, personally identifiable information. Once a customer has provided exemption certificate details, TaxCloud will know to automatically return zero sales tax due for that customer’s transactions in the future (for entity exemptions).

Next question: Once registered to collect tax on internet sales, would we also have to collect tax on our phone and mail order sales to the states?

Answer: Yes. Whatever systems you use to handle your offline order management can easily be enabled to communicate with with TaxCloud using our open and free TaxCloud Application Programming Interfaces (APIs). Several order management vendors have already updated their platforms to do this, so your system may already be integrated — in which case all you would have to do to enable TaxCloud with your system is click a single checkbox. If you system is not yet TaxCloud compatible, you can always export and upload your transactions to TaxCloud (in a simple CSV format) so it can incorporate them and ensure complete and accurate sales tax returns.

Next question: What if our customer uses a debit/credit card to pay for the purchase and the sales tax . . . who pays the card fee on the tax amount?

Answer: Many states have enacted vendor compensation programs to account for any additional fees related to collecting sales tax on a transaction.

Final question: Will adding sales tax to our internet sales hurt business? What has been the experience of your current customer base?

Answer: Most consumers shop online for convenience and selection. In fact, collecting sales tax may even improve your relationship with your customers! Your customers likely do not know that when an online retailer doesn’t automatically collect sales tax at the time of a transaction, the consumer is legally obligated to send the associated tax directly to the state — not to do so is a misdemeanor. Of course, in reality, they likely will not get caught unless they are audited. But if they are audited and you have collected sales tax on their transactions, they will love you for it (and likely resent the online retailers that didn’t collect sales tax when they get hit with the bill for the unpaid sales tax plus penalties and interest).

In addition, the sales tax revenue you collect from your customers will directly benefit their communities. Especially these days, when so many vital community services are being cut because of budget shortfalls, sales tax revenue is essential to fund schools, police, firefighters, and more.

Put simply: Collecting sales tax for your customers is a matter of customer service and corporate citizenship. It is an opportunity to show your customers that you care for them and their community.

As far as states engaging in “more agressive pursuit” – states are already engaged in extensive enforcement efforts for larger retailers as you describe.

The larger issue at hand is regarding smaller purchases – a significant share of e-commerce is conducted by “small” Internet retailers (those with less than $1M in revenue). Although seemingly small due to their lower annual sales revenue, thier impact on lost states revenue adds up quickly due to the sheer numbers of these smaller vendors. A study compiled by the Univeristy of Tennessee calculated that in 2007, the states lost approximately $2.2B in sales tax revenue from e-tailers at this scale.

Couldn’t the states recoup lost revenue and help make-up budget shortfalls with more aggressive pursuit of multi-channel, multi-state retailers and greater use tax enforcement, without a federal mandate imposed on all inter-state retailers?