The next two paragraphs after the one you mentioned were possibly more relevant:
Opponents predict a bookkeeping nightmare. Online retailers would have to keep track of more than 9,000 sales-tax regimes. Internet companies in states with no sales taxes — Montana, New Hampshire, Oregon and Delaware — would have to build a collection apparatus from scratch.
Senator Ron Wyden, Democrat of Oregon, called the legislation “a targeted strike against the Internet and a targeted strike against the digital economy.”
Look at this as a SaaS opportunity. Create a clearinghouse to manage all of the "software". Fairly simple API, you give me the State of the person, perhaps ZIP to find County level taxes and out comes a {"state":".08", "cityX":".01"}. Leave it to the client to handle exact cost calculation.
As for the states that don't have sales tax, they can pay the clearing to provide a {"state":"0"} for all requests.
A little more difficult than that. I grew up in Pennsylvania. My zip code was for the town next to the township I lived in. There were taxes for stores in the town that weren't levied on the township (two different local gov'ts). Also, PA doesn't tax clothing while Maryland a few miles away does. So every item you sell would have to be categorized in some way (and maybe differently in different areas). So, every delivery address would have to be accurately mapped to multiple, overlapping taxing authorities (state, county, local, school district, etc.) and every item you sell would have to be mapped to multiple tax categories (clothes and shoes not taxed in A, clothes (but not shoes) taxed in B, shoes (but not work boots) taxed in C, etc.)
To get the most precise taxation possible you would need to get the customer's address and calculate their zip+4.
This is ignoring the fact that exemptions would be a nightmare.
The only thing I could think of that would be worse than needing to manage that massive API would be if I was a business owner who had to access multiple APIs for DC plus all the states with sales tax.
> The only thing I could think of that would be worse than needing to manage that massive API would be if I was a business owner who had to access multiple APIs for DC plus all the states with sales tax.
So you're saying that putting together that SAAS would be a slog and its very existence would be a moat to other people who don't want to slog through.
You're probably right on that one. There is a comment elsewhere in this thread that mentions a SaaS company that handles sales tax automation and reporting, so clearly there is some money to be made.
It seems to me that this is something that a state law permitting Internet sales tax could (and would have to) work around. E.g. charge a 0.5% lower "Internet sales tax" but have it apply to absolutely everything for ease of bookkeeping.
So in general it's more complex than I opined in the three minutes it took to post, but it doesn't seem to be impossible. If anything it's complexity merits a service. This would require a few people and sme coordination, but should be doable.
In my area, there are state, county, and city sale taxes. You would need a full address and a database of addresses within city limits in order to determine the proper sales tax.
There are many rural areas in the US where the physical address is not in the USPS database and as such "does not exist" (the USPS only has PO Boxes). That makes using any address neigh impossible for accurate tax calculations.
I'm not sure if any of them have nice JSON interfaces yet, but there are certainly 3rd-party services where you can query geographically detailed information on sales taxes, down to exactly which SKUs are taxed at which rates (e.g. what qualifies for a "grocery" exemption).
I don't know how common it is, but I do some some areas have a maximum on sales tax. The Kenai Peninsula Borough in AK had one when I lived there. I can't remember the details, but I know with the truck I bought the tax bill was $35 as that was the cap.
Opponents predict a bookkeeping nightmare. Online retailers would have to keep track of more than 9,000 sales-tax regimes. Internet companies in states with no sales taxes — Montana, New Hampshire, Oregon and Delaware — would have to build a collection apparatus from scratch.
Senator Ron Wyden, Democrat of Oregon, called the legislation “a targeted strike against the Internet and a targeted strike against the digital economy.”