I have a theory.  I like to refer to it as The Beatles Effect.  Allow me to explain.  As a lot of you know, I talk, write and consult about Ecommerce as it relates to accounting systems, mostly QuickBooks.  I have been troubled lately with all of the many different packages out there; it makes it nearly impossible for a new business to startup an ecommerce business without talking to multiple vendors for each different facet of the business.  Accounting software, shopping carts, shipping, sales tax, merchant accounts, B2B communication to name a few.  This is enough for the average startup to become overwhelmed and is a recipe for disaster if not properly managed.

OK, so you are asking yourself, how does that relate to the Beatles?  Well, I am getting to that.  Most of us are familiar with the term Synergy, which is defined as the interaction of elements that when combined produce a total effect that is greater than the sum of the individual elements, contributions, etc.  The Beatles are a perfect example of that.

You have John, the strong, defiant one

Then Paul, the intelligent one

Of course George, the quiet one

And Ringo (I couldn’t think of anything for Ringo)

Individually, they most likely would never have made it in the music business, but put them together and you have the biggest musical force the world has ever seen (or ever will see, in my humble opinion).

That same theory is very prevalent in business, where teams perform at a level that the individual members could never attain.  Equally true, specifically to ecommerce.  There is nothing out there for the small/medium size business that puts together all the pieces of ecommerce.  If there was, I believe it would be much like the Beatles and would outperform anything the individual members could ever accomplish on their own.

What if there was one place you could go to that would incorporate all of these components into one place so an ecommerce business had one point of contact?  For now, it’s a working theory.

If you are planning on coming to Scaling New Heights In June, we will assemble a panel of Ecommerce and EDI experts in two panel discussions to discuss this theory and see how you can help your business (or your clients business) capitalize on some of the great tools that are available.  Until then, throw on the White Album, sit back and  enjoy the ride.

 

 

 

 

 

 

 

By Shane Ratigan

In part 1 of this two-part series, “Amazon Law” was defined and I presented the 3 types of Amazon Laws.

Amazon Laws passed in several states may or may not pass legal challenges, and these rules may never be adopted by the majority of states. In any event, the one unquestioned accomplishment of these rules has been to push the discussion surrounding sales tax obligations and remote sellers to the front. Advocates for and against collection of sales taxes on remote sales declare the existence of Amazon Laws indicates the desire for greater uniformity and a more reliable legal standard for collection, or not, of sales taxes on remote sales.

In the meantime, Amazon, Inc. agreed to begin collecting sales taxes in many states. Ironically, the agreements made by Amazon with states tend to preclude application of so-called Amazon Laws to Amazon, Inc. itself. Amazon’s evolving strategy in this space likely means a reduction in its litigation costs and an increase in collected sales taxes for some states, but for other remote sellers, the challenge to comply with remote seller laws remains an active one.

Effect of Amazon Laws

If there is one constant that remains at the heart of the remote seller/sales tax collection issue it is this: the U.S. Supreme Court consistently advises that the U.S. Congress has the constitutional power to regulate remote seller sales, but so far, Congress has done nothing. Yet, when you consider that the first modern sales taxes in the United States were established in the 1930s, any Congressional ennui concerning sales taxes is not new. The new phenomenon driving the current policy interest is the explosion of e-commerce.

As stated above, the rapidly expanding e-commerce marketplace, combined with the largest remote seller’s aggressive challenges to existing sales tax doctrine, dragged the issue from the pages of dusty industry and economic journals to the front page of The Wall Street Journal and The New York Times. One result of the exposure is a laser focus on the U.S. Congress and its constitutional ability to bring some measure of uniformity and reliability to this area of law. Currently, there are a few proposed pieces of legislation in the U.S. Congress that seek to do just that.

The Mainstreet Fairness Act, the Marketplace Equity Act of 2011 and the Marketplace Fairness Act of 2011 are all current active pieces of proposed legislation in Congress. The proposed legislation share common components: mandatory collection of sales taxes by remote sellers, a sales volume floor whereby smaller companies would be exempted, and finally, states would be required to improve administrative burdens for out of state filers.

What’s Next

The inevitability of Congressional action is hard to argue. Once the U.S. Congress dips its toe in the sales tax waters, all bets are off as to the future of state Amazon Laws. If the Congress satisfies the state’s interests, the current group of Amazon Laws could be rendered moot almost overnight and may be scrubbed from the books entirely. On the other hand, if Congressional action does not meet the requirements of the states, the patchwork of Amazon Laws could remain active and possibly expand to other states.

In December 2012, the Marketplace Fairness Act was inserted in an annual defense spending bill, but was struck before the law was voted on. The proximity of a Congressional remote seller sales tax agreement to actual law has never been narrower. Internet vendors and traditional vendors with an Internet presence should remain aware of states’ and federal efforts to radically change the way remote sellers transact sales, whether those efforts are called Amazon Laws or not.

 

About the Author

Shane Ratigan, JD, LLM, is content compliance manager working in sales tax law and sales tax compliance with Avalara, a Software-as a-Service end-to-end sales tax solution for businesses of all sizes. Contact him at shane.ratigan@avalara.com.

 

By Webb Stevens

My what is Taxable??

Who could know that one of the hottest issues in sales tax has to do with a simple song? Just when we finally got used to paying an average of 99 cents to download a song – compared to the only a few years ago when we took music off the Internet without knowing whether the download was actually legal – along comes something known as the Digital Goods and Services Tax Fairness Act of 2012.

“Digital products” are broadly construed in many formats, including:

• digital audio files – music and ringtones,
• digital video files – television shows or movies, and
• digital books, delivered electronically without physical media

Even something like virtual gaming is considered with regard to regulating state sales tax – something most people never even consider as part of the digital product environment.

Did this complicate matters or did it simplify them?

Actually, the Act is all about consistent treatment of tax rules across physical and digital goods. Congress passed the Act to prevent states from taxing digital goods in a manner inconsistent with a state’s existing sales tax legal framework. Think of this as Congress’s effort to make sure digital goods aren’t taxed in a discriminatory way. This appears to be a truly preventative measure since no states currently taxing digital goods would be in violation of this law.

While sales tax on digital goods is a state-by-state decision, there are many gray areas among states as to how they define “digital goods.” However, remember that whether a state does a good job defining digital goods has little or no bearing on whether digital goods are taxable in that state. The impact of the federal law may or may not be significant. On a practical level, it remains to be seen whether this federal law will have any real bearing on sales tax of digital goods but it is certain to cause questions and confusion for many.

 

About the Author

Webb Stevens is senior director of Product for Avalara.

Contact him at webb.stevens@avalara.com.