This stuff makes sense for cities, it’s just frustrating how much more difficult it makes it to operate a “mom and pop” software business. The complexity of potentially complying with hundreds of state and municipal governments - not where you are located but where online purchases originate - is a pretty significant deterrent to setting up a small side business. Imagine if every food truck had to pay taxes based not on where the truck is, but where the customers were from.
On the other hand, this is an obvious opportunity for payment processors to automate. I’m surprised sales tax still isn’t built in to stripe, for example.
It was only recently added to SmugMug's processing.
Having owned two businesses, I can say it's a lot more complicated than most people realize. Tax rates and reporting don't fit neatly into city, state, or even simple ZIP Code boundaries. Plus different products, even sold from the same food truck to use your example, can have different tax rates.
There are vendors that will calculate taxes for you, but the ones that do it right down to the address level charge a lot. Plus you are sending all of your customers' detailed purchase data to a third party.
That sounds like a good reason for the federal government to regulate interstate commerce, such as by preventing local governments from establishing such obstacles.
Constitutional jurisprudence has discovered the most amazing powers hidden in the emanations and penumbras of that clause, but sometimes it would also be useful to look at its plain meaning.
> The complexity of potentially complying with hundreds of state and municipal governments - not where you are located but where online purchases originate - is a pretty significant deterrent to setting up a small side business.
Check out Avalara and TaxJar. They're not 'built in to Stripe' but have hundreds of integrations with WooCommerce, Shopify, and more.
This just opens up space for a business to calculate these fees as part of a SaaS offering. For example Avalara already has a product that can calculate the thousands of different sales taxes that exist in the US. The internet opens up a huge market to mom and pop software companies, I don’t see why we need any special tax cuts or holes for us.
You don't reside there, you're not liable to abide by their laws. I run a small US company, I don't have to comply with GDPR for example. Same applies here.
I don't see why any company would implement this, perhaps appeasing regulators at the federal level.
You would have been right up to June 21, 2018. After that, you are wrong. See South Dakota v. Wayfair, decided by the Supreme Court on that date [1]. If your business is in the US, and your customer is in the US, you can now be required to collect taxes for your customer's jurisdiction even if you have no connection with that jurisdiction other than online or mail order customers reside therein.
I assume you mean well, but it’s not about your residence (or for businesses the place where they are incorporated) but rather where you do business. Just because I’m in California doesn’t mean I can do business in the EU without complying with their laws. Same goes for Chicago.
You’re not required to do business there, but they can fine you for non-compliance if you are doing business.
Note: all of this is in reference to “software companies” as the GP said, and doesn’t touch on “corporate nexus” and stuff like that.
Are you actually doing business in those places, if people from there just go to your site that is hosted in your home jurisdiction? I'm not sure that it logically follows.
Obviously, governments interpret the situation in the way that accrues them maximal power and brings the most activity into their purview.
A free service probably isn't going to get sued into compliance if you accept sign ups from EU, but if you accept payment from EU that definitely counts as 'doing business' and you should expect to comply with local regulations.
I think the question everyone here is interested in having answered is "what if you don't?" The EU has no jurisdiction here (in my country); the law applies to the citizens of those countries. Sure, some countries might be willing to extradite you to the EU for breaking laws that apply there, but that seems rather extraordinary (in the case of a law that applies to internet sites), not to mention an outrageous abuse of power.
Presumably the main consequence is they shut down your business in their country, and if you dodge fines etc they don't let you come back.
Extradition would be quite reasonable if you were conducting a very large business, and/or ignoring significant laws, e.g. prohibition on human trafficking. But they aren't going to extradite you for failing to be GDPR compliant on $10 of app sales.
That's factually incorrect. No one in the EU can sue a California company for failing to comply with EU laws so long as the company does not have a physical presence in the EU. They'd have to block their site or something as an EU court has no jurisdiction over a California company and would be unable to take action against them.
An explicit law would need to be made in your jurisdiction forcing you to comply with their laws. I'm not aware of any such thing.
On the other hand, this is an obvious opportunity for payment processors to automate. I’m surprised sales tax still isn’t built in to stripe, for example.