2007-09-12T05:54:53-07:00 Practical Ecommerce info@practicalecommerce.com http://www.practicalecommerce.com/ Copyright 2007 Confluence Publishing DBA Practical Ecommerce http://www.practicalecommerce.com/articles/560/Quick-Query-Avalara-Founder-Rory-Rawlings/#comment3618 2007-09-12T05:54:53-07:00

I will briefly post back here since the discussion might be of interest to some e-store managers in the US. I did not say that the tax rate calculation was solely based on the zip code. That would indeed lead to incorrect results in some cases, as Rory pointed out. A sophisticated shopping cart program like ProductCart will automatically detect that a zip code is associated with multiple tax rates (as that information exists in the tax database uploaded to the store) and will prompt the customer to select the city/county that they are shipping to. The customer is prompted to make a selection - versus an automatic detection based on the shipping address - to avoid issues triggered by misspellings. Anyway, the point of my posting was to indicate that there are alternative solutions to correct tax calculations in the United States. Tax calculation is definitely not a trivial matter, as Rory pointed out. And things are quite messy elsewhere too :-) Think about places like...

http://www.practicalecommerce.com/articles/560/Quick-Query-Avalara-Founder-Rory-Rawlings/#comment3611 2007-09-11T08:21:08-07:00

Cost is certainly a very important consideration. However, accuracy and service are very important as well. The AvaTax service is priced, similar to a cell phone, based on the number of transactions and complexity of the products you sell. If you have a small volume of transactions, you pay less than $30/month. In terms of accuracy, the company you refer to bases their calculations on zip code. Zip codes are designed to enable accurate delivery of mail and do NOT coincide with jurisdictional boundaries. The WA DOR tells me there are 40% of the zip codes cross up to 5 different jurisdictional boundaries. Therefore, if you simply rely on zip codes, you will not be accurate -- you will either over charge or under charge sales tax. If you under charge, you answer to the state. If you over charge, you answer to your customers, and in more and more cases, to a class action lawsuit. Accuracy is becoming more and more an issue in the world of sales tax. AvaTax is based on a...

http://www.practicalecommerce.com/articles/560/Quick-Query-Avalara-Founder-Rory-Rawlings/#comment3607 2007-09-11T06:15:53-07:00

Rory, I'm sure that Avalara provides a great service, but in my experience the thousands of small businesses that have an e-commerce budget of under $2,000 a year might find the subscription a bit expensive (most hosted and licensed small business e-commerce packages are priced in that range). There is a solution that falls in between what Avalara provides and the simplistic approach of specifying a single tax rate for a state (which leads to tax calculations that are often incorrect). It might be of interest to some Practical eCommerce readers. The solution consists of manually uploading a regularly updated database of sales tax rates to a shopping cart that can properly look up the customer's tax rate from that database. In our experience, this solution works quite well, although it is certainly less automated than what Avalara delivers. For example, our shopping cart software provides such a feature in partnership with a company called Tax Data Systems...