TaxCloud – 2010 Statements vs. Capabilities

R. David L. Campbell, a founder of TaxCloud was kind enough to comment on my blog post regarding their attempts to lower the small business exemption to $100,000 or actually even completely remove the exemption.  Why?  Because it’s so easy, everything will be solved by software so no one really should be exempt.  First, a recap of his reply:

“I wanted to take a moment to respond to your justified frustration that several of the largest hosted commerce platforms do not support TaxCloud yet. Let me simply say that we share your frustration. We have spoken to all of them, and many of them believe that most of their sellers will be exempt (below the $1M small seller exception in the MFA). Accordingly, they are reluctant to devote resources to enable TaxCloud. As you know, in a hosted commerce environment (versus installed software), only the host can make modifications to the platform – so, we must standby for their cooperation.”

But that’s not the story he gives at every opportunity.  And also perhaps yet another reason why he’d like no small business seller exemption.

Summary:

  • Rosy comments 3 years ago about ease sellers would have handling compliance
  • Recommended $100,000 small business exemption but only because he couldn’t offer zero exemptions
  • At that time in 2010, Taxcloud was certified only 2 months earlier
  • Taxcloud only supported a small handful of shopping carts (6 carts) a year after this paper.
  • Taxcloud didn’t and doesn’t support the 3 platforms they identify as the largest (Ebay, Amazon, Yahoo)
  • Taxcloud still has significant gaps in even the shopping carts and platforms supported.
  • Let others figure out how to implement it – Just pass the bill!

In September 2010, R. David L. Campbell offered a prepared statement for the record for the public hearing regarding the small business exemption of the Marketplace Fairness Act (H.R. 5660).  Please keep in mind that this is only 2 months after being certified as a provided.

“Although I make my remarks today in support of setting the SBE threshold at $100,000, this is only because we have not been offered the opportunity to argue away the SBE altogether.”

Of course his new business which stands to reap financial rewards if MFA passes, wants every single company to be affected by it.  No one with remote sales should be exempted.  He then goes on to explain why.

“Sales Tax Collection Services Make Compliance Easy”

“TaxCloud handles every aspect of sales tax collection and remittance for our clients. Most merchants
are able to set up TaxCloud in less than 20 minutes. TaxCloud can be integrated into virtually any
accounting or e-commerce shopping cart system, and it is completely free to merchants.”

Let’s parse this. Handles every aspect?  Perhaps for your clients who have supported carts and extremely simple setups.  Otherwise, clearly every aspect doesn’t cover a huge chunk of retailers’ true needs.  They can’t even handle our shopping cart at this time, let alone our order processing software or Amazon sales.

“can be” integrated into virtually any e-commerce shopping cart system.  This just isn’t the case in my opinion.  If by “can be”, they mean their is an API and with custom IT and programming work, you might be able to get almost anything to work, perhaps, perhaps not.

Let’s take a trip on the wayback machine and look at their partner page for supported carts.  The closest snapshot I have is from November 2011, more than a year after these statements.  Whose carts do they publicly support in late 2011?  (Source: Archive.org)

  • Zen Cart
  • OsCommerce
  • KonaKart
  • X-Cart
  • Presto Cart
  • Paypal Express

Wow!  That’s a really small number of carts to make these statements a year earlier.

Unsupported platforms, but planned or in progress in late 2011 (from their 2011 partner page)?

  • Miva Merchant
  • Google Checkout
  • Avactis
  • 24SevenCart
  • PDShop
  • Magento
  • CS-Cart
  • Prestashop
  • Cartweaver
  • Quickbooks
  • Microsoft Dynamics NAV
  • GoDaddy

That’s still missing a ton of carts and platforms.  Here’s some others they didn’t appear to support in their partners page from 2011, even a year after pitching their solution.  Some of them are still not supported.

  • Yahoo Store
  • Volusion
  • BigCommerce
  • 3dcart
  • Aspdotnetstorefront
  • Salesforce
  • X-cart
  • Zen-cart
  • Shopify
  • Amazon
  • Ebay

He continues:

“The very existence of TaxCloud refutes the primary argument of those who say that in this legislation, “small business” should be defined as a merchant that has more than $100,000 in annual sales. They say that collecting sales tax on out-of-state purchases would be burdensome for small businesses, that it is too costly and time-consuming.

It is difficult to see the merits of this argument when a free service is available that handles every
aspect of sales tax management at absolutely no cost to merchants.”

Except that it’s just not the case.   And that’s my problem with him and his company.  It’s a misrepresentation by a company that will handsomely profit if legislation passes, which is why there is zero credibility here.  Only a tiny handful of carts are supported at the time of this writing (2010).  Meanwhile, in my opinion, he’s vastly overstating capabilities to Congress in this letter to try and help MFA pass and cash in on the legislation.

“There are more than 500 shopping cart solutions on the market today. The three most widely used shopping carts are the complete ecommerce platforms operated by eBay, Amazon, and Yahoo!Stores, which together service millions of sellers.”

And 3 years later, still not supported.  And they supported 6 shopping carts at that time.  Some of which I had not heard of.

Well, maybe it’ll be like Field of Dreams.  Pass it (MFA) and they will come.

“Historically, when faced with security industry or payment card industry mandates, speed of implementation and time to deployment have rewarded these vendors with more customers, so, they tend to be proactive and even aggressive in implementing necessary changes.”

Yes, please pass intrusive, costly and burdensome legislation on many thousands of businesses and hopefully the platforms will have to scramble and support us (Taxcloud).

Finally, his conclusion.

“Conclusion

While I have offered several compelling arguments for setting the SBE threshold at $100,000—
arguments supported by fiscal and political considerations as well as sheer common sense—I would
like to ask the committee to consider whether an SBE is even appropriate in H.R. 5660. I would
argue that it is not, because the very businesses that would be affected by the SBE already rely upon
e-commerce platforms that will easily enable them to collect interstate sales tax — and may, in fact,
not allow them to avoid collecting such tax, once this law passes.”

They are being “economical with the truth” in their arguments.  Cart support is only the tip of the iceberg in the business processes regarding sales tax collection and years later there are still major gaps in their cart support.  I don’t see any order processing software in their partners page, like perhaps Stoneedge, Mail Order Manager, Order Motion.  Quickbooks?  And they don’t handle multi-channel sellers, which I believe would be a large percentage of $1 million+ sellers.  This is just rent-seeking by a company who wants the Marketplace Fairness Act passed so they can collect their toll.  And disingenuous to boot.

Comments

  1. I just checked the support forums on the ZenCart site. TaxCloud is still having problems figuring the correct tax when discount coupons are applied. It seems the add-on mod wants to charge on gross (retail) price, not the price after the coupon is applied. The law varies State by State regarding the use of coupons and what is taxable, yet TaxCloud seems to think the law applies nationwide.

  2. As someone who has already built my own Magento integration (albeit still in need of some polish), I can attest that getting these things integrated can take time.

    If you’re expecting TaxCloud to support all of these different carts out of the box, that’s a big expectation. They are an API provider, you can’t expect them to have experts on every different platform. That is the role of the store-owner. You can either be your own expert or you can hire one, but do not think you don’t need one.

    Their support told me that a module would be ready Oct 1. I haven’t bothered to ask about it yet, but I am certainly curious to see how they felt it should be implemented. After all, they are not experts in Magento, so I half expect them to be approaching the problem from the wrong angle (based on how Magento works internally and when the API call to their service must be made..,. it’s rather awkward until you realize the better way).

    • Rick Smith says:

      The point of the article is to question their public statements including those to lawmakers vs. what Taxcloud could support at the time. They claim it’s easy, there are no issues, implement sales tax collection on everyone.. while offering support for very little of what’s out there at all. Even now, years later, they support very little of the real world of commerce and continue to misstate the ease of compliance.

      I expect Taxcloud to support a large percentage of order processors, the most popular carts and third party platforms before spinning a yarn about how it’ll be free and easy. They still don’t.

Trackbacks

  1. […] can read more about David Campbell’s statements on the Marketplace Fairness Act here. It’s an enlightening piece that juxtaposes Campbell’s own quotes about the MFA against […]

  2. […] of the Marketplace Fairness Act should be dropped to $100,000, or even none at all.  Covered in this post titled Taxcloud 2010 statements vs. […]

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