John and Linda Lester, owners of a small family business in Illinois, recently wrote about their experiences in trying to comply with new sales tax regulations brought about by the Supreme Court’s Wayfair decision. “There are at least 12,000 sales tax jurisdictions in the U.S. The sheer volume of different rates, tax bases, reporting requirements, exemptions, holidays, audit requirements, and frequent changes are overwhelming,” they said. “Conventional wisdom has it that technology, in the form of specialized software, is the best way for businesses to manage this complexity. This software is often touted as readily available, easy to implement and use, and, in some cases, free. Unfortunately, the reality is drastically different.”
It isn’t just conventional wisdom that makes these claims about sales tax compliance software. The Supreme Court, when it was argued that allowing states to require remote sellers to comply with their sales tax regulations would be an undue burden, airily said that there was — or soon would be — software to take care of that.
If there wasn’t anything right then, they figured, market forces would make sure it came about soon.
Sales tax software
We make excellent sales tax software. Sales Tax DataLINK is a patented sales tax compliance solution that not only provides the sales tax engine you need but makes it easy to file accurate sales tax returns in multiple states. But let’s see what Lester said about sales tax software.
“Software is expensive. There is no such thing as ‘free’—someone pays, whether that is the business directly, consumers indirectly through higher prices, or the state via contracts with software providers, which ultimately means the taxpayer,” they wrote. “In our case, it took almost a year of effort and over $100,000 to get up and running with 44 states and the District of Columbia. We had to defer hiring a national sales manager during that time because of the drain on our resources.”
They weren’t using Sales Tax DataLINK.
We don’t mean to be flippant. We know that the most popular sales tax software is expensive and hard to implement compared with ours. We also know that dealing with sales tax is difficult and messy at the best of times. That’s why we offer complete sales tax services — you can put yourself in the hands of our highly qualified accountants and leave it to us.
But many small to medium businesses are facing the same kind of frustration the Lesters faced.
Sales tax simplification?
The Lesters say that simplification of the sales tax system, not software, is the solution.
They have practical suggestions. “What if remote sellers had the option to collect one rate for each state—decided by each individual state—and remit it all to one central clearing house?” they suggest.
We’ll be interested to see whether there is any move to make this change or to simplify the sales tax system in any meaningful way.