|Tue July 16 2013 12:19:32|
Tax Collection Software for Online Merchants - Is It Really Free?
By: Kenneth Corbin
On Monday, we reported on a newly launched grassroots coalition of online sellers that formed to oppose federal legislation that could require them to start collecting sales taxes on purchases made by out-of-state shoppers.
Thirty of eMain Street's members flew to Washington in late June to make their case to members of Congress. Among their chief talking points: the free software that the states would have to provide sellers before requiring them to collect sales taxes is anything but.
In a letter to the leaders of the House Judiciary Committee (where the Marketplace Fairness Act, after passing the Senate, now awaits consideration), the coalition offered an estimate that the total costs of the bill would amount to between $20,000 and $300,000 in the first year, enough to wipe out the entire annual profits for some sellers.
The software might be offered by the states for free, but the real costs lie in the retooling of the shopping-cart and order-management systems to support the integration, overhauling product databases and training staff, the coalition argues.
"These numbers are based on actual invoices and hard costs for development, software upgrades, and employee time," said Drex Davis, CEO of Scrapbook.com and one of the organizers of eMain Street.
One of the leading providers of the free tax software, Tax Cloud, vigorously disputes those lofty estimates of integration costs. David Campbell, CEO of the company behind Tax Cloud, countered that a growing number of platforms have begun to "pre-integrate" the product, and that "integration efforts for almost any mainstream commerce platform" are paid for by the states.
The Marketplace Fairness Act - and similar legislative efforts at the federal and state level - has drawn sharp reactions throughout the ecommerce industry, including dire warnings from groups like eMain Street that new sales-tax requirements would effectively put scores of sellers out of business.
The real cost of the software is a central point of the debate. The estimates that Davis' group cites range widely. The software providers, and other advocates of the bill, argue that integration would be little more than trivial.
Which brings us to our call for comments from you, the sellers, software providers, developers and others who have hands-on experience with the systems in question. How much of a real cost are we talking about when we contemplate integrating the free software states would have to provide under the Marketplace Fairness Act?
About the Author
Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.