TaxJar plans e-filing service for online sales taxes

Fueled by $600,000 in seed funding, the startup automates collection of local taxes related to e-commerce transaction.
Written by Heather Clancy, Contributor

Refueled with $600,000 in funding from several seed investors, startup TaxJar solves an annoying but very real problem for Internet entrepreneurs: how to automate collection of sales taxes related to online transactions, especially on platforms that weren't necessarily set up to accommodate this originally.

That includes both sellers using both widely used e-commerce platforms – Amazon, eBay, Shopify, PayPal, Big Commerce and Etsy --  as well as publishing sites using WordPress where the ability to collect tax isn't native (for selling things such as white papers or reports or such).

Given all the activity related to state sales taxes and possible federal legislation, TaxJar is using its new funds to add new features quickly, including both better ways of automating collection and features for e-filing, said Mark Faggiano, founder of the San Diego-based company.

"The core product we announced last year focuses on getting the return-ready data together … Very soon we will enable the third part, which is the e-filing part of this," he said. 

The company's application programming interface, which can be extended to enable myriad shopping carts and e-commerce platforms, is another valuable asset.

Faggiano figures that using TaxJar helps compress two to five hours of work into 10 to 20 minutes, and that doesn't include all the research it has done to help entrepreneurs understand the relevant rules in the first place.

TaxJar's new investors include executives from eBay, Facebook, Intuit, Magento and ShipWire.

The TaxJar service is priced starting at $9.95 for up to 1,000 monthly transactions, including state and international sales.

Another company, tax services adminstrator, Avalara, has a similar offering that is a pared down version of its TrustFile reporting service, which covers 12,000 jurisdictions. That company raised $30 million earlier this year.

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