Over the past 12 to 18 months, the tax landscape for online retailers has changed dramatically, with many states passing legislation to require collection.
This has been a very high-profile political issue, with many brick-and-mortar retailers crying foul over old laws that allowed big sellers like Amazon to skirt sales tax, if they didn't have a physical presence in a given state. Things are changing: the massive electronic marketplace now collects tax for sales in 16 states, and the net effect is that many smaller sellers also face the complicated challenge of figuring out their tax liability.
TaxJar is an online service designed to make that task simpler for businesses that use the following platforms: PayPal, Etsy, eBay, Amazon.com, and Shopify.
It works by collecting and aggregating the data needed to pay taxes for specific counties and cities. TaxJar does this for multiple states and for multiple marketplaces (which is useful if you are a retailer that uses more than one online sales location). The application also keeps track of relevant deadlines and legislation that might change things mid-year.
Right now, the service is promoting its back-taxes reporting capabilities for sellers that neglected to start collecting taxes last year. "We remove the complexity for merchants by determining liabilities in minutes, taking into account any nexus determinations and tricky state-by-state origin and destination rules," said Mark Faggiano, CEO of TaxJar, in a statement about the new feature. "Determining liabilities can be nerve-wracking, especially for users that think they are doing something wrong, but don't want to talk directly to the state agencies. We are using technology to help take uncertainty out of the equation."
The basic version of TaxJar, which handles up to 1,000 transactions per month, is priced at $9.95. The startup is currently offering a free trial for companies that want to test out the application.