NOTE: This is an open letter to Avalara from one of our members. Many of us are disappointed with their actions.
Many of us do not appreciate Avalara’s continuous efforts to understate the complexity and all those who read articles written by someone affiliated with Avalara need to be aware that Avalara will be one of the greatest financial winners should this bill become law. (See Fortune.com).
#1 – Software only automates things if given the right inputs. The black box will take an input and give an output. The inputs need to be a) what the item is in a very detailed way that each state defines differently, b) the shipping location. No software is going to be a mind reader to know what the item is. Many of us sell unique items for which there are no UPC codes. Our very business models depend on uniqueness and constant supply of fresh unique products. The biggest risk of audit won’t come from using a 6.25% rate rather than 6.35% (and certainly software will get that right) but from misclassification of the item because a silk scarf is a taxable accessory in one state and a non-taxable apparel item in another, and in another taxable but only if it is machine painted but not if it is hand painted.
#2 – Many customers calculate their own tax and pay by check. There is no software which can automate that. How do we help someone who isn’t online, doesn’t have a computer, doesn’t want to learn to have a computer continue to shop remotely?
#3 – The software integration efforts are enormous. Avalara cannot offer anything that “plugs and plays” with our many home grown systems, all of which must have the same rules and must also know the specific classification of the products. We have our backend ERP system, our front end web systems, our WHS which charges the credit cards and ships the orders, and our returns system. Anyone on a custom system will need to figure out how to do, test, and maintain custom coding to talk to the “free” software.
#4 – Speaking of that free software, as the MFA is currently written, that’s 26 different pieces of free software (one for the SSUTA states and 1 for each of the others), not all of which will work in the same way. Of course, that creates the need for very non-free software from a company like Avalara because no one could possibly integrate the 26 freebies, so we pay dearly for a piece of middleware, right?
#5 – And what about shipping and handling? Taxable or not? Well… that depends on the state. Some states, it is always yes. Some it is always no. Some it depends on whether the item is taxable. Okay.. for those of us with $ based shipping tables… say a consumer owes $19.95 in shipping and in their state 2 of the 4 items are taxable and 2 are not. Do we charge sales tax on half the shipping and handling? Do we weight the taxable amount of shipping and handling based on the dollar value? What happens when someone returns an item for which some of the shipping and handling sales tax was taxable. If we don’t refund the shipping and handling, do we refund the portion of the sales tax on the shipping and handling that was due to that item. Good luck getting the same answer twice from any state. Given that every company’s shipping and handling logic is different based on its business model, pricing strategy, dominant channels etc … we need a whole new level of integration between our shipping calculations and all this “free software.”
So please, stop saying it is easy, when it isn’t. And, if this becomes the law of the land and everyone figures out how to get it done (presuming they can do so and even stay in business), Avalara will come in and try to be the savior… for a price!
Terri S Alpert
Founder and CEO
Uno Alla Volta and The Artisan Table