What Streamlined Sales Tax Means For E-Commerce

Internet Business

Thursday, June 9, 2005

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What Streamlined Sales Tax Means For E-Commerce

by Ken Downie
Buying on the Web is nice, isn't it? Unless you live in the same state an e-commerce site is based in, you don't have to pay sales tax. (Technically, if a
sales tax is not collected, you're supposed to pay use tax, but nobody does.) This
can be very convenient, especially for big purchases, and is certainly one factor
that drives people to shop on the Web. But states are complaining that they're
losing billions of dollars a year in much-needed revenue, and some municipalities
have been forced to levy additional local taxes to pick up the shortfall for public
schools and other government services. The truth is that most e-commerce
companies don't even come close to doing taxes right, and companies that have
been able to skirt state and local sales tax for years will have to start paying the
piper once federal support for the Streamlined Sales Tax Project (SSTP) kicks in. (Read Our Top Story)

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  • ONLINE SHOPPERS ARE BABES IN THE WOODS
    A new study by the Annenberg Public Policy Center of the University of
    Pennsylvania, "Open to Exploitation," reveals the naive attitude of many online
    shoppers toward pricing practices and the behind-the-scenes tracking of online
    shopping habits. You might be surprised what some merchants are doing with
    customer data – and how they're setting prices. A PDF of the full report is freely
    available.

  • GOOD RIDDANCE TO SPYWARE
    Spyware seems a much easier pest to vanquish than spam or viruses, thanks to
    the crushing blow of Microsoft's XP Service Pack 2, which included anti-spyware
    protection that seems to be as good as Lavasoft's or anyone else's. As good a
    barometer as any for monitoring the impact of spyware is Dell Computer's
    support call center, which has seen a 50 percent drop in spyware related calls
    over the past year. And I definitely have fewer friends bugging me to "fix their
    computers."

  • MYMSN? MYGOOGLE? MYYAHOO? OH MY!
    Want a personalized homepage? You won't have to look far, or pay anything.
    Such offerings are all the rage this month, as the success of personalized portal
    services from Yahoo and Google turned up the heat on Microsoft, prompting the latter
    to "reposition" its MyMSN service as Start.com, which supposedly provides more
    open access to content from around the Web (whatever that means). All three
    services are really nothing more than personalized portals where users can
    aggregate news, sports, weather, entertainment, and pull in RSS feeds, and
    MyYahoo is the most mature, most popular, and best of the three.

  • WI-FI SOON TO MAKE FLYING A LOT LESS BORING
    Shut off those cell phones, but keep the laptops on. Soon the skies will get a bit
    friendlier     once Wi-Fi Internet access becomes standard on flights, so those of
    you who don't want to watch "Shrek 2" again can blissfully surf away. What, you
    mean we're there already?

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Name:

SmartDisk Corp.

What It Does:

SmartDisk provides portable, network and multimedia storage
products and technologies to businesses and consumers.

How It Uses the Internet:

SmartDisk uses a secure e-commerce storefront to sell
its products directly to consumers.

What Technology It Uses:

AvaTax ST from Avalara

Gains Realized from Using this Technology:

Integration with SmartDisk's Great Plains accounting system was the key factor
in selecting AvaTax, says Mark West, Director of IT for SmartDisk. "I wasn't
going to change our entire ERP system based on sales tax," he laughs. "AvaTax
interfaces very well with Great Plains."

Before switching to AvaTax, SmartDisk was using a Yahoo storefront to manage
its business-to-consumer e-commerce sales.

"The Yahoo store had a sales tax module built in," says West. "But it could only
calculate sales tax at the state level – it couldn't accommodate local jurisdictions.
AvaTax gets right down to the district level and charges the appropriate sales tax
every time."

Before switching to AvaTax, SmartDisk had to employ a CPA with tax expertise
to reconcile the difference state by state, in order to ensure compliance across all
districts. With AvaTax, those services are no longer required. "That cuts one
body out of finance," says West. "Now all we have to do is remit the exact figure
that AvaTax charged, and we're done -– simple as that."

What's more, since the Yahoo store was not integrated with Great Plains, West
used to employ a data entry staff to rekey transactions from the Yahoo store into
SmartDisk's ERP system. Using Avatax, each transaction record is now written
to Great Plains as soon as the purchase takes place -- with no rekeying
necessary -- thus saving time and reducing the potential for human error. All told,
West was able to cut down on his data entry staff by an estimated 90 percent.

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  • CUBICLE CULTURE
    Unless you're lucky enough to work at home or win that bid for the posh corner
    office, you're probably stuck in a cubicle like the rest of us. And when a cubicle is
    all you have, you might be tempted to take its layout and contents a little too
    seriously. "I just met with the cubicle designer," a friend told me the other day, as
    she prepared to move her office equivalent of a mobile home. I didn't even know
    that job existed. For a lighthearted take on how our cubicles define us, check out
    Hostway's creative viral marketing campaign that lets you snoop around Bob's
    Cube     -- a typical office worker's cubicle. Imitation being the sincerest form of
    flattery, a month later Netscape launched a considerably lamer cubicle-oriented promo, prompting Hostway to cry "rip-off"!

  • JUST WHO'S ON THIS INTERNET, ANYWAY?
    If you've ever been curious about the cultural makeup of Internet users, you can
    find the latest usage and population statistics at internetworldstats.com. Asia and
    Europe lead the world in Internet usage, with North America close behind. Not
    surprisingly, Africa and the Middle East have some catching up to do -– although
    the Middle East boasts the highest rates of growth in usage. A similar site,
    internettrafficreport.com, monitors the flow of data around the world and rates
    each continent using a value between zero and 100. Higher values indicate
    faster and more reliable connections. The global index as of this writing is 77,
    with North America enjoying the fastest data flow with an index of 87.

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