Washington State Destination Sales Tax

[MgmtSpec]

Washington State passed a law requiring Internet Merchants to collect sales tax based on SHIPPED TO DESTINATON within the State(july 1, 2008). There are about 40 counties - but tax varies within counties in some cases it is by city. Is ShopSite aware of this? Is a solution being developed? I have a potential client very interested but if we can't solve the tax isue they will use another cart.

[MgmtSpec]

http://dor.wa.gov/Content/GetAFormOrPub ... esTax.aspx

[loren_d_c]

So what is the issue? ShopSite's tax-by-zip feature has always been based on the ship-to zip. So all you should have to do is setup different tax zones for the different potential tax rates, and put all of the zip codes for those tax rates in that zone. And turn off the generic Washington state tax zone, of course.

And I'm assuming you mean this only applies to Washington State-based merchants, right? Because as far as I know (disclaimer: I am not a tax accountant or attorney), the state of Washington can't make merchants in other states collect tax for them.

-Loren

[MgmtSpec]

Hi Loren,

You did not read over the link closely. This is BIG and affects you (ShopSite) *now* as well as other states are considering similar laws.

Yes, this is ONLY WA for now. It is *not* just by zip code from what I can tell. It is city by city - a city may have more than 1 zip code in it. I will call to confirm but that is how it appears.

Look at the rates on pages 2-4 of this link:
http://dor.wa.gov/Docs/forms/ExcsTx/Loc ... rterly.pdf

Since there will be multiple rates per zone - we can't use the zone.
Shopper selected would be a VERY long list of ALL cities in the state.
This store is low volume so they could "manually" handle it for a while but that is an ugly solution. I don't think they will pay to remodel the site with a new shopping cart that can't handle tax issues.

ShopSite will need to address soon as anyone selling online in WA will be affected in 8 months...

[Jim]

Just hope that your legislators get their heads on straight and back out of the mess that they have gotten themselves into, like Utah did. Utah passed the same type of law in 2005 which was to go into effect in June 2006 and then had to postpone the implementation because it would be so complicated for merchants. Then after reviewing the complicated mess this year they repealed the law that would have forced the Streamline Sales Tax (SST) (which is anything but streamline). The complexity of what this SST does isn't readily apparent but when you look at it closely a store selling beds and delivering them to another locale would have to charge one rate for the bed which is delivered and a different rate for the pillow and sheets that the shopper carries home.

The current version of ShopSite CAN handle the tax configuration you need using the Tax by Zip feature. All you have to do is enter the various zip codes into different fields based on the tax rate the for the various locales. You can sort the table that Washington gives (they should provide it in a spreadsheet format) based on the the tax rates and will probably find that there are very few different rates for the state (say 10-20) Then you can get a USPS zipcode table for the various locales and enter those into the table using the wild card ? to break the zips into groups. For example I live in Orem, Utah which has 2 post offices and several different zips. The entire city charges the same rate so I could create a zipcode section for tax rate of 6.35% In the zip code field I would enter 8409?, 8405? Which would cover all of Orem's rate. Since Provo also has a tax rate of 6.35% I could also add 846?? which would cover all of Provo's zip codes and their tax rate. This won't necessarily be an easy task but it can be done and will work.

[MgmtSpec]

Hi Jim,

Thanks for the info. Unfortunately I don't think there is a chance they will figure it out before it is supposed to go live. They all are eying those internet $$$ they think they are losing.

If tax is by ZIP - there are about 14 rates ranging from 7 - 8.9%. SO assingning rates initially would be a big job but should be just adjustments to the 14 rates after that.

Problem is - I really think this is by CITY - not zip. I supposed they could collect by zips, lets the errors go or manually correct and pay any fines if caught...kind of ugly though we as a solution provider, we should have something.

You can bet there will be more of this "Streamlined" (in gov eyes) taxes passing. Sooner or later ShopSite will need a solution. I'm an avid supporter of SS - but I can't afford to lose clients because tax issues are a pain.

[Jim]

The thing is they aren't losing any money made by sales within the state of Washington because merchants in Washington would already be charging tax on sales they make in Washington. Since they can not control interstate commerce there is no way they can force another state to collect tax for them on sales to people in their state. Interstate commerce is regulated by the federal government so until there is a federal law for sales tax the SST can do nothing for individual states. Fewer than half of the states have signed up for the idea and of those a number aren't compliant with what SST wants (or have backed out but are still listed on the site (such as Utah). There are a number of states that have no sales tax so I'm sure they will be pushing hard if it ever gets to congress to not impose a national sales tax on residence of their states. Of course if you look at what congress has accomplished in the last few years it will be decades before they ever get around to this.

All we can do now is live with the decisions the legislatures make and hope for better times.

By the way when Utah was planning on going to SST the number of tax zones went from around 260 to almost 500,000 (that's half a million). Because they broke it down by zip+4 zipcode. That's what you call "streamlining".

I should add the same disclaimer that Loren had. The opinions expressed are my own. I am not a tax attorney so they may not be 100% correct.

[MgmtSpec]

Here is what my prospect found out:

"Well, I found a human at the tax department and it was not really good news. Basically, they have no idea how to implement it for web based businesses. They don't have code or data streams readily available. Apparently a big part of the problem is that Washington State decided to join the stream line sales tax band wagon, but we are one of the few states that have so many different tax codes so no one knows how to implement it. She said if we made a good faith effort they would try to be lienant. She said techincally right now it is done by address. In which case you have to go to their web site and type in the address and get the tax rate. She said doing it by zip code is not a good way and they don't even have a list of zip codes and tax rates. She suggested doing it by city to start and she said there are 200-300 cities listed. One thing they are apparently looking at is going to the zip + 4 program which is far more refined but they don't have it yet. They don't currently have this information in electronic form, it would have to be manually entered from a pdf file that they have. She did explain the law to me so at least I understand what they were after and basically it is to help the small towns and they don't care about the small business."

Sounds a whole lot like the Utah mess but I'm not betting they'll back down. Technically, we know this is not going to be complied with on wide scale. I'd have this client right now if I could promise SS would have a patch/fix for this in place by June. Any chance we can get some confirmation regarding SS being able to support WA tax proposal???

I've got about 15 hours into counsulting and its going down the toliet due to the tax thing..

[loren_d_c]

What 'fix' do you propose ShopSite should make, since it doesn't even sound like your state tax agency knows what they are doing?

-Loren

[BFChris]

I have to agree with Loren here. I can't see any logical and feasible way for Shopsite to implement such a feature. Tax based on a specific address is just incredibly obtuse and would be a considerable burden for a website to validate/calculate in real-time. Even tax based city-by-city is a bit tedious, though it could be done using the Shopsite customer-selected tax drop-downs.

[MgmtSpec]

First off it is NOT my state tax issue. I'm a web developer with several dozens clients using SS. I don't even consider other e-commerce solutions as I'm happy with SS and have learned the features and customization well. I'm doing my share to help grow SS business!

There is a tool on the WA tax site that allows someone to look up taxes - so obviuously someone has the "programming" or knows what the parameters are. I would think just as UPS can calculate rates from a "starting" address, SS could have a something built in for the WA tax with the mechant address entered.

Maybe it will never happen, but why let down any WA clients you have?
I guess if it was my company I would be looking into how the WA tax situaion affects my product offering as right now it looks like there is at least one client that won't be using SS as a direct result of lack of support.

If it was me, I would take the suggested approach, manually map zipes to cities and the 14 rates and deal with any errors as the orders come. Tell that to a client and they think you just are not taking their taxes seriously.

My prospect reports other shopping carts claim to have modules supporting this system. If this does go through I lose a one prospective client. How many doe SS lose?

So should I just post a feature "ehancement" request?

[BFChris]

Just a further thought here.....

You said that the tax is by CITY, not by ZIP, and that a city can have more than one zip code. This is, of course, true, but I don't think a single zip code can have more than one city (at least on the post office website, there is only a single city listed as "Default/Acceptable" for each zip code entered.)

However, this still makes Shopsite's tax by zip code feature perfectly appropriate to use.....you just list all the zip codes (actually ranges of zip codes) in different cities to which a particular tax rate applies.

I'm still not sure I see why tax by zip wouldn't work. It may result in a few slight miscalculations (assuming that a zip code can be split into 2 different cities, which again I don't think is possible, per the USPS website.) However, these should be minor and I doubt they'd be a problem given the lack of implementation planning that clearly went into this new law.

I still agree with the basic concept that a complex addition to software shouldn't be made under the onus of a poorly thought-out law that is bound to be revised or repealed.

Also, you mention how the UPS interface calculates a shipping rate baed on address. Actually, I believe the interface again is basing it on zip code only, not a full address (at least the Shopsite version of the API.)

[MgmtSpec]

I live in Blaine, MN - we have 2 zip codes in the city. Minneapolis has numerous zip codes. I do not have a zip/city map of WA but from what my prospect tells me it is likely some cities will have more than 1 zip. And if the tax person says taxes are by address (?) not zip - zip is not going to work.

Like you, I would not let it dictate my business. From *my customer* point of view and in this particular case it is not acceptable.

Just looks bad we can't handle it accurately. Again, it would be a waste to develop a solution if it is not needed, but just like preparing for a disasater, why not have a plan just in case?

Sooner or later the greedy state governors are going to force unreasonable tax collection burdens on e-commerce just becuase it is done via computer so they think it can be automated w/o any understanding of complexities.

Mike

[BFChris]

I live in Blaine, MN - we have 2 zip codes in the city. Minneapolis has numerous zip codes. I do not have a zip/city map of WA but from what my prospect tells me it is likely some cities will have more than 1 zip. And if the tax person says taxes are by address (?) not zip - zip is not going to work.

More than one zip code in a city isn't a problem. Look at the Shopsite zip-based sales tax set up. You enter a list of zip codes for a tax rate, then enter a "tax zone" (basically a name for the tax rate), then enter the percentage tax. If it really is city by city, you just find a place where all the zip codes for each city are listed and copy them in, then give "tax zone" the city name (ie. "Seattle Tax Rate"), then fill in the applicable tax rate. Repeat for each city.

I can't imagine it being MORE specific than city by city...and nothing in the reference materials you provided seems to say that it would. In particular the PDF file referenced basically shows a breakdown city by city organized by county for reference). All that remains would be to find the corresponding zip codeS for each city. So, again I don't see why tax by zip won't work, other than the tedium of initially matching city to zip code. It's perfectly fine to have more than one zip per city, as Shopsite allows a whole list of zip codes per tax rate. The only issue would be if a single ZIP CODE was divided into 2 separate cities (which I don't think is the case..and, even if it is would be extremely rare).

[MgmtSpec]

Hi,

By Zip Code still may not work.

After more research I found some good news and bad news. I found a list of all zips and cities in WA. It does not appear any city is split between zips.

Now the bad news. Tax is by county. In some case cities ARE split between counties. In fact, my prospect lives in a city that is split with parts in 2 different counties. Thankfully right now BOTH counties have the same tax rate! But that may change and one county is currently discussing a rate change.

So now I need to find a good county/city map of WA, identifiy how many cities are split between counties (hope it is rare), pray that the split matches zip codes...and SS will work....

So...just wondering...is anyone at SS looking into this for possible mod? I suppose it would be a *PITA* to try to follow tax changes in every state and plan program mods for them but since this is a law that is passed, maybe it deserves closer attention than just the "talk" stages.