Free Software under Streamlined Sales Tax?
How often do we hear free and, upon investigation, are disappointed? Loopholes and fine print can be that bane of your existence. So what does HB 173 really mean for you?
Free software association HB 173 maintains an interesting amount of hype. It promises free software to businesses to involve them in Streamlined Sales Tax (SST). Sales and Use Tax is a notoriously complicated branch of corporate taxes, so SST was created to simplify and modernize sales and use tax collection and administration and minimize the many differences between the states’ sales tax policies and practices. It arose in response to efforts by Congress to permanently prohibit states from collecting sales tax on online commerce.
Is the state provided software really free?
Well, yes and no. I agree the cost to use the software is free as it is stated in the bill. However, the bill does not cover cost of implementation, mapping, or change of vendors.
There are some who will argue the software is “plug-and-play”. Although it is intended to be, there are many undiscussed aspects to SST that can stand in the way. It has a limited amount of vendors, yes, but what about all those shopping carts, ecommerce, ERP and Legacy systems where there are no integrations? Who is going to pay for this cost?
Offering tools to connect systems requires technical help. How many small businesses have the IT professionals on board that can do this?
Businesses know if their product is taxable in their home state. But what about everywhere else? Some will argue this is part of the point of Streamlined Sales Tax (SST). Theoretically yes, but if a small business maps their product to the wrong group and item, will the states still hold the small business exempt? Another option is to pay for a tax profession to do the mapping to get it correct. That is just another expense for the business. Sounding a little less free right?
Then think about the capacity of all the SST compliant companies. Do they really have the capacity to handle to the flood of taxpayers even with a fraction of the companies to set up? Now multiply that to few million businesses needing to be switched over. How long does it take to locate a tax professional, IT professional, identify the best free software company, and create the hooks for the API? What is the wait time to speak with an Integration specialist with the software company? Do you have to complete an online ticket to get help? Once done, test, fix, and retest. Cost can be measured in more than just dollar signs. The time involved can end up being its own price tag.
But it doesn’t stop there. Can your local CPA handle your Sales tax needs or are they an Income Pro? If so, where do you go? Let say you just pick a name from the hat, like most businesses will end up doing. Only around 8-10 businesses are certified to do this, and chances are millions of businesses will need the same. What is the waiting time until that can get to your account? When they do, do they even understand your particular industry? They need to if they are going to map your product to Free Software product grouping. Once done, the will need to test, re-map, and test again.
Is there really anyone out there that thinks this will take a day? If so, be careful of those people. The audits will have a field day with you.
Speaking of audits, you have to make sure that accuracy is a major player in the new software you are given. The software should check for calculation errors, but what happens if your products are mapped incorrectly. Who pays the bill?
Be careful of those who quote it “Free Software”.
If you want software that can solve all these problems at a competitive price, then come check out our website or call and get a free demo of what we can do for you. You just might be surprised.
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