Friday, May 14, 2004

A Rant About Sales Taxes & SST

I have nothing against sales tax. In many ways it is the most fair form of taxation we have. If you spend more, you pay more. It is (more or less) equitable.

To date sales taxes were collected based on the location of the store where the items were purchased. That is no longer the case. Now there is the "Simplified Sales Tax" which is supposed to cure all our ills.

'Cept it doesn't.

The theory is sound, but the practice is extreme. If you tax based on the location of the end user, you defeat the benefit of buying online because it levels the playing field.

Does this sound like one of those letters you get where it starts out, "In order to serve you better..."?

Let's take one of the more extreme examples of the lunacy this will impose as of July 1.

We mail brochures. In the past we paid sales tax at our local rate because we were the "end user". Now that it is based on the final location it changes everything.

You see, the mailers get printed and then sent to the mailing house. The mailing house puts the names on them and then ships them. Our clients then get these scrumptious little pieces of paper in the mail, and come running for our wares.

We are at X location, so we pay the tax at that rate. End of story.

Now it gets complicated. Oops. I mean "Streamlined".

Now if they go directly to the mailing house, and are then mailed directly, the individual customers become the points of taxation. This means that the taxes need to be calculated for every brochure that goes out based on the Zip+4 it went to. If you are sending 25,000 of these things, that means you have to figure out the Zip+4 for each of them, then calculate the tax rate for each of them, then calculate the taxes for each of them. You must then report the disposition of each Zip+4, and the amount taxed for each.

Look at Utah. One of the least populated states has over 400,000 Zip+4 routes. Is it even practical to figure out all that even with computers?

But it is done, and there will be no going back. The theory is sound. The execution is going to drive people to drink.

You can see if your state is on the hit list by going to http://streamlinedsalestax.org. I hope you have a good accountant on staff if you are in one of the 20 states that are going with SST!

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