An article in The Atlantic asks a great question: “Why aren’t more states pursuing online sales tax?”
The article discusses the reasons that states should (and, in all likelihood, do) want to pursue online taxes: the severity of state budget crises, the amount of money online sales tax should bring in. (The Atlantic estimates the total amount of uncollected sales tax to be about $7 billion; as they say, “This isn’t going to solve all of [states’] budgetary problems, but it certainly would help.”)
Then they focus on what they see as the primary obstacle to collecting sales tax online: logistics.
Now think about Internet sales. Online shops are located across the world. An online retailer can sell an item in any state. It would have to have every state’s sales tax built into its website’s framework to provide customers with the correct after tax total cost for their shopping. And that doesn’t even bring local taxes into account, as some cities require additional sales tax as well. This could get quite complicated.
We’re happy to report that the solution to the logistics problem already exists. It’s called TaxCloud.
TaxCloud is a comprehensive sales tax management service that calculates the sales tax due on any purchase anywhere in the country. It also monitors every tax code and automatically updates any changes, so that retailers using TaxCloud stay in compliance with local tax laws with zero effort. TaxCloud also generates state-by-state monthly reports, files state sales tax returns, handles tax exemptions and audits, and more. (To learn more, visit the TaxCloud website.)
TaxCloud is easy to use and takes just 20 minutes to set up. And, since it’s completely free—there’s no set-up fee, no transaction fee, no fee of any kind—it’s perfect for small retailers that don’t have the resources of Amazon.
Calculating sales tax is no more difficult than calculating shipping rates in real time, something most online retailers do. And with services like TaxCloud available for free, we can’t imagine that any online retailer would find it difficult or costly to collect sales tax.