TaxJar Helps Sellers Manage Online Sales Taxes
By Ina Steiner
There's been a lot of discussion about how federal sales-tax legislation affects online sellers in recent years, especially now that the Senate passed the Marketplace Fairness Act. A company called TaxJar promises to "take the pain out of filing sales tax," and is targeting sellers on Etsy, eBay, Amazon, Storenvy - or any seller that use PayPal to process their payment transactions.
Sellers already have an obligation to collect sales tax in states where they have a physical presence. As sellers increasingly use fulfillment services where they store their products in out-of-state warehouses, their tax obligations expand accordingly. For those sellers, sales tax remittance is already a daunting task, one likely to get more burdensome with the passage of federal legislation.
TaxJar officially launched its online sales-tax management tool this month. It connects its clients' accounts with online marketplaces and payment services to automate and track many of the tasks associated with collecting and remitting the tax to states owed.
TaxJar says collecting sales tax from buyers is the easy part - the hard part is:
- Remembering how much tax was collected;
- Figuring out how much is owed;
- Filling out state forms;
- Filing on time;
The company also explains that most states require years of transaction history - "we help you stay compliant in case of an audit."
In conjunction with its official launch, TaxJar also introduced a new feature: Local reports by tax jurisdiction. "No more manual work to break sales tax down by counties and cities." The company says sellers who have to go through every sale to determine which tax jurisdiction the sale belongs to can spend hours or even days to calculate the amount owed to each locale.
For example, a seller required to file a return to the state of Ohio is forced to calculate sales for each of the state's 88 counties. "TaxJar has done extensive research to provide educational content so that customers don't have to sift through state websites or wait endlessly on the phone to talk to budget-depleted support staff for information about nexus, rates, and help filing out forms."
A company spokesperson tried to relay to EcommerceBytes the complexity of state and local sales tax laws on online merchants. "With all the talking heads and misinformation out there about internet sales tax, the Marketplace Fairness Act, and such, we're really trying to help sellers get through this stuff. To give you a sense of what we're attempting, in addition to building them a software solution, check out some of our posts to help sellers better understand the complexity facing them." He provided a link to a blog post about local sales tax in Pennsylvania and a link to a blog post about sales tax in Arizona titled, "Why Business Owners Trying to Do the Right Thing Still Can't Get Sales Tax Correct".
TaxJar also plans to allow users to file their sales tax returns directly to states within the product. TaxJar has a 30-day free trial, and costs $9.95 a month. More information is available on the TaxJar website.
About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to email@example.com.
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