[thelist] Tax rules to destroy the entrepreneur..

Bob Meetin bobm at dottedi.biz
Mon Oct 17 11:45:52 CDT 2011

Wordy I know...

One of my clients has me building an eCommerce system (well actually integrating, customizing and configuring). She'll be selling merchandise of hers as well as other manufacturers, drop-shipping direct from their warehouses. Setting up drop-shipping has been an experience, but it's now configured so that shipping/charges are calculated correctly from any of the dozen + warehouses in various U.S. states.  Hurrah... :)

So now the nasty stuff - taxes. There may be some simple states, but Colorado is not one.  What a mess! In the U.S. you are obiligated  to charge sales tax for anything that crosses state lines according to state rules, then additionally if the sales fall in special local, district, city transit areas.  Just for Colorado, there are over 1200 lines in the .csv file we  purchased for configuring taxes.  It took half a day to write a script to import this, beats 2 days of user interface with the keyboard...

Then comes reporting - there comes the state tax form which you are to fill out quarterly which includes much of the regional, transit district stuff.  And next the individual city tax forms, about 70 of those.  Some say that you are supposed to first with each city register first.  Imagine having to register with 70-odd cities before ever making a sale just for the privilege.

Now let's add drop-shipping to the puzzle. If the same holds true for the other states where the manufacturers' warehouses are located, I/we will need to purchase the tax .csv file for each of them at $49 per pop, configure and turn it on to my client to prepare for sales and tax filing. My client did some checking to confirm that this is true. So I'm assuming so.

Yesterday afternoon when testing the taxes for Colorado I noticed that some zip codes in the .csv file had multiple entries for taxes.  Further investigation told me that this was because these zip codes span multiple counties.  In my tiny little ruralish town of Erie, with a single zip code, the west is in Boulder County and the east, Weld.  This means of course that the shopping cart software must either request your county up front or programmatically determine your county from your street address or however?

I'm not sure that I have ever purchased anything online in which I entered my county.  I took a walk through Amazon last night - da nada. And realistically do you suppose that average small shop software package has been built to accurately if at all identify your county from address?

What's the point to this message?  Maybe none.  My client wants to be squeaky clean.  Unfortunately this system is not designed to support the small entrepreneur without breaking the bank before the bank even opens.  I commonly use the term, 'reasonable.'  Somewhere along the path interpretation needs to come into play. You want to play by the rules, right?

Too much melodrama? Opinions? Mistakes?


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