I've been distracted this past week because I've been dealing with a sales tax audit. It turns out to be a fascinating glimpse into some of the collisions between a web-based business and the more traditional government processes.
Because our only significant office is here in Minnesota, we pay sales taxes only in Minnesota. And because Minnesota is a relatively small portion of our sales, we're just not talking about a ton of money, or a major issue.
Nevertheless, we've always worked to pay our sales taxes honorably, and I thought we did a pretty good job.
A nice auditor from the State of Minnesota has been gently helping me to see how wrong I was. You see, it turns out that the 'location' of a particular transaction is not as simple as I thought. I thought that it was just based on our office; that would mean we'd collect Minnesota tax, St. Paul tax, and another Twin Cities transit tax (in short, a single, easy to calculate tax).
But it turns out that, even though we're selling a purely digital product, we're supposed to tax people based on where the product is delivered to. And, to make it even more fun, the only way to figure out the tax for a given transaction is to look at the 9 digit zip code, not the 5 digit zip code we've been collecting all this time. So we have to grind all this info and figure out which of 25 different local tax zones we have to pay. Heaven forbid we should fail to deliver the $2.54 we owe the city of Duluth, for example.
But what a nasty collision: I want to build a simple web store to collect money so I can help pay people to improve Wine so people aren't forced to use Windows. But governments, particularly right now, are very interested in collecting every single penny they can. They don't especially care if it causes me heartburn. Now, to be fair, I have to admit that educating children and paying fire fighters is slightly more important than freeing the world from Windows.
Fortunately, market capitalism is alive and well. It turns out that there are at least four separate companies that provide a web-based service to companies just like mine. We can hook into a single web api, and then they promise to deal with all of the complexities of sales taxes.
So hopefully we'll get that figured out here quickly, settle up our back taxes, and I can resume my delusion that we're paying our taxes honorably. And, more importantly, I can get back to cracking the whip on Quicken, because we've got Quicken users to save...