Taxcloud Capabilities vs Statements – There You Go Again.

Anti-MFA store owners including myself have long been upset with Fedtax (AKA Taxcloud)’s public statements (and I’m sure private statements when talking to legislators and their staff) about how all is solved with Taxcloud.  It’s free, it’s software, it’s online.  Problem solved.

I’ve taken them to task more than other CSPs like Avalara because of the reality distortion field they try to generate.

Well now Fedtax is apparently trying to raise more money.  I guess all the repeated trips to D.C. do add up.   Cheerleading for the MFA while demonstrating incredibly simple examples of how Taxcloud can do the simple task of calculating a sales tax for the cart does take time and money.   I’ve never thought this was a particularly challenging aspect in a vacuum and is only the tip of the iceberg, not anywhere near a solution.  But they don’t care.  Their business model requires the MFA to pass for the business to succeed.

The problem is with their public executive summary regarding their note offering. (9/23/2013)

“At the time of this writing, Taxcloud is pre-integrated with over 40 commerce platforms”

Either their partner page is out of date, or this is wrong.

I saw 42 listed partners on their page (now 44).  17 show as coming soon.  Which equals 25.

Yahoo Stores are one of the partners listed in their Prezi presentation for investors, referring to the partners they support.  But…

Yahoo Stores aren’t yet supported at the time of this writing (the cart I know and use).

“Pre-integrated” would be a stronger phrase than I would use – but I was an IT guy, not a marketing guy.   Seems like marketing fluff at best.  Even if/when they do actually support Yahoo, it would be through a third party developer, not something I’d call pre-integrated.  But the point is moot since it’s not supported.

On the face, it would appear that Taxcloud is making demonstrably false claims again.


  1. I spent around two hours talking with David Campbell, CEO, of TaxCloud and took copious notes. At the time, among all solutions, fewer than 30 out of 287 web store platforms could be accommodated by a solution. If now over 40 can be accommodated, that leaves over 247 platforms that are still without an accommodation. That includes mine which now represents over 40% of the smaller businesses selling on the Internet.

    What is of greater concern is that any software company offering a solution is lobbying D.C. and stating inaccuracies about how the automated integration will affect small business owners who must code their merchandise according to over 13,000 sales tax districts across the country. They are proclaiming that it’s “plug and play.” In reality, the task is so complex that the prestigious and neutral association, the American Association of Attorneys and Certified Practicing Accountants (AAA-CPA) state that even highly trained CPAs would make mistakes that greatly increase risk of audits. And the coding process is extraordinarily time intensive. Virtually all tax accountants familiar with the software out there and the requirements to comply with the MFA are opposed to it. They’ve written Congress to express and explain their opposition. They believe that the MFA would kill their small online business clients!

    Furthermore, Mr. Campbell stated that it was advisable for the business to check against a hand-held manual the accuracy of calculations prior to the automated system pulling the money out of the smaller busieness owners’ bank accounts on a designated date, either monthly or every three months. He said it wasn’t mandatory. However, without doing this, over payments could not be identified to the 46 states, around 600 Native American sales tax districts, and territories where the use tax would have to be submitted. As you might guess, once that money is submitted, it’s virtually permanently gone. But also, it was wise to correct mistakes because the business owner was liable for mistakes in coding, not the software company. Another huge burden for the business beyond the initial coding. Even one audit per year is too much – completely traumatizing to a small business. Receiving audits from 46 money hungry states is devastating. And the business owner would have to travel to another state to fight the audit or otherwise deal with another state’s rules and regulations (taxation without representation).

    Given that Internet sales comprise 6% of retail sales and 90% of sales tax are already collected because the Internet is already dominated by big box retailers who see vast presence in continued expansion there, the application of the Marketplace Fairness Act (MFA) or any act comparable to it would fall on the smaller businesses who would become tax collectors of their out-of-state buyers use tax and remit throughout the country. Submitting sales tax is much more business friendly in that the money is submitted to one sales tax district. Becoming a tax collector of use tax, such as the MFA requires, is vastly more complicated and burdensome, so much so that it would cripple small online business. The remitting of use tax should remain between the buyer and the state and resolved at that level. There are proposed solutions, including a viable one from the AAA-CPA. Congress should focus on these solutions or solutions such as that being offered by Michigan which is doing a pretty good job at this time.

    The big box retailers are invested in passing the MFA. And they are aligned with big government in doing so. The big box lobbyists paid the Senate over $50 million to pass the act there. We’re seeing big money spent with the House. Why?

    If this act passes, it will substantially thwart or destroy big box retail competition – the more nimble, more creative smaller businesses. But additionally, it opens the door for all types of Internet regulation, monitoring, fees, and taxation.

    The US recovery from the recession is not occurring as it should. The US has never pulled out of a recession without smaller business hiring. Smaller businesses are being hurt by Obamacare and would be hurt by the MFA that is not only an small business killer, but would kill the Freedom of the Internet. It’s a self-serving act being promoted with deception and manipulation. It’s bad for this country, for consumers, for taxpayers, and for Americans, in general.

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