Who Hasn't The 'New York Times' Upset?

July 7, 2005

It seems as if�the New York Times newspaper is pissing off all sorts of people: business people, technology experts, politicians, federal judges, the CIA...

�

part I�

�

The New York Times�on Tuesday challenged Congress to reverse the Supreme Court and allow states to impose sales tax on out-of-state Internet-based sales transactions. This has the possible consequence of setting the business world buzzing, basically to nationalize the now-voluntary, state-driven SSTP (Streamlined Sales Tax Program) initiative.

�

Avalara, a sales and tax calculations company, has responded and taken a stand with an editorial letter response to the July 5 New York Times editorial “Internet Sales Tax”.�

�

This is a politically complex issue, as it would immediately raise transaction-based taxes by $20 billion, “which would be good for governments but perhaps bad for businesses and consumers — and it might prove extremely difficult for especially small businesses to implement,” according to Alvalara.�

�

Some want to exempt small businesses�-- those under $5 million in sales per year�-- but the Times�wants for no exemptions.�That's another political issue, but is one based on the�business challenge that faces businesses�suddenly required to comply with an incredibly difficult challenge�-- calculating, collecting and remitting sales tax for every jurisdiction in the nation.�

�

And it's that business challenge that�has spurred new discussions on technology issues�-- all revolving around the question: "How can small businesses keep up with more than 8,000 tax jurisdictions and more than 900 tax-rate changes per year?"

�

Avalara says it takes�no position on the political questions, as it's not the company's expertise, but it does claim to have an answer for the technology questions “which so threaten small businesses.” Avalara’s AvaTax ST on-demand, Web-based sales tax calculation service serves the needs of more than 300 small and midsized businesses. The company says its product is “already doing (for companies that currently have cross-jurisdictional tax liabilities) everything that would be demanded of small Internet-based businesses under the New York Times’-recommended changes to the tax code.”�

�

Avalara Founder and Chief Tax Automation Officer Rory Rawlings’ letter to the New York daily newspaper follows.

�

--------------------------------------------------------

�

To the Editor of the New York Times:��

�

In a Tuesday July 5 editorial entitled "Internet Sales Taxes", you editorially challenged America to end a 13-year-old Supreme Court-mandated moratorium on taxing Internet sales, a moratorium that you said costs local and state governments $20 billion a year in lost revenue, primarily from sales conducted by small businesses selling on the Internet. You specifically noted that many states are participating in what's known as the Streamlined Sales Tax Project (SSTP), but observed that under this plan, smaller businesses might be exempted from the process, primarily because the technology was not available to make it cost-effective – or even possible – for smaller retailers to calculate and collect those taxes.��

�

However, what you didn't report is that – while the decision to extend sales tax to Internet and other cross-jurisdictional sales is essentially a political decision – the means by which small businesses could participate in such a sales tax program already exists.� My company, Avalara, already has in place and operational an on-demand, web-based solution to this sales tax calculation challenge, one that is serving small and medium-sized businesses across the nation.�

�

The questions of taxing Internet transactions – and of providing smaller businesses an exemption – are both political questions, ones that are being addressed, and ones that must be resolved by state legislatures or Congress� As Founder and Chief Tax Automation Officer for Avalara, I have consulted with – and even testified before legislative committees on – the impact of SSTP on small and medium-sized businesses (SMB), as well as on the ways that technology can make the implementation of SSTP not only possible, but relatively easy on a transaction-specific basis.�

�

In spite of widespread belief to the contrary, the technology to make tax calculation – and tax collection – possible for even the smallest online businesses already exists.� Avalara's AvaTax ST has been providing this service for small and medium-sized businesses for a year now, and we are meeting those needs for 350 SMB-market businesses."�

�

Currently, businesses with a nexus – a physical presence in multiple states – are required to calculate, collect and remit sales tax.� However, there are more than 8,000 taxing jurisdictions in the U.S., and until now, only the largest companies could afford to keep up with those jurisdictions – as well as with the more than 900 tax-rate changes which take place each year� One professed purpose of SSTP is to make it easier for businesses to comply with this complex set of tax laws – first, by standardizing and literally streamlining the taxes, and then by setting up a series of third-party providers who would handle these tax obligations for businesses.�

�

Under the Streamlined Sales Tax Project, the sellers' obligation to calculate, collect and remit sales tax will be outsourced – at no cost to the seller – to one of a few qualified third-party services approved by the SSTP's steering committee.� To date, seven companies have been certified by SSTP as sales tax service providers, and of those seven, only Avalara currently serves the SMB market.� Avalara's on-demand, web-based service works from within the sellers' business accounting software systems, automatically and seamlessly, and under SSTP, it will function in the same fashion.� Currently, Avalara is integrated with ten of the most popular accounting packages marketed for small and medium-sized businesses.�

�

As the Streamlined Sales Tax is adopted, either state-by-state or by the Congressional mandate that the Times advocated, more accounting applications and e-commerce shopping cart developers will integrate with sales tax service providers such as Avalara, to ensure that their end-users have access to this no-cost SSTP tax calculation and collection service.�

�

So, at the bottom line, the question is political, not technological.� The states, the Congress – perhaps even the Supreme Court – will ultimately decide the fate of current initiatives at cross-jurisdictional sales tax collections.��

�

However, when and if those decisions are made, the technology already exists that makes it not only feasible, but incredibly easy, for even the smallest businesses to comply with any of the proposed changes to the sales tax collections policies now in place.

�

---------------------------------------------------------------

�

part II�

�

Also, the same newspaper has recently popped back into media spotlight (-the news provider has become the news-) because one�of its reporters�refuses to give up the identity of one of its sources.�A column�published and an opinion piece for Time magazine in 2003 gave the name of an undercover CIA operative, after which two reporters (but not the writer of the piece, who has avoided contempt charges but refuses to say whether or not he testified) came under fire when they refused to testify to a grand jury investigating the leak of the CIA operative's name, even when�pried in federal court.�Faced with jail time, one reporter complied�in cooperating�(reporter Matthew Cooper defended his decision to testify because�he says his source released him from confidentiality that day), while the other reporter, Judith Miller,�was sentenced to jail time yesterday.�Miller faces up to four months�in jail. She was taken into custody immediately.�

�

part III

�

New York yesterday was voted out of being the hosting site�of the�2012 Olympics, in the first elimination round by the official Olympic committee.�It's not yet clear if people are taking it out on�the�New York Times.

�

---

DRB