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It's even worse than that, since there are cities and counties which levy their own sales taxes. If an Internet retailed has to collect all of these, they need a comprehensive sales tax database plus a mechanism for sending payments where they're due.

I see a great opportunity for a webservice startup here.




These exist. Rates are easy (http://www.zip-tax.com/) and the filing portion can be handled by HR/Payroll companies like Paychex (http://www.paychex.com/payroll-taxes/sales-tax-payment.aspx)

Though I'm sure there is an opportunity to help small companies since most companies who currently need to manage national sales taxes are large (have a presence in every state).


There are a number of companies doing this kind of data collection/rental, though they're mostly focused on the enterprise market. The data is needed by folks like supermarkets who operate in lots of jurisdictions and need to charge the correct sales tax in each one. In addition to the rates varying by city/county, the taxable items may as well, e.g. in some jurisdictions food isn't taxed, and the definition of "food" varies, too.

This is one of the companies that collects a giant database of jurisdictions and tax rates, as well as a db mapping SKUs to jurisdiction-specific tax categories: http://tax.cchgroup.com/sales-tax-data/default.htm?cookie_te...


Some large retailers already have at least a partial handle on this. My zip code crosses 2 jurisdictions and I'm always asked if I live in jurisdiction A or B. I assume they're doing it for local tax purposes even thought we have only a state sales tax here.




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