July 31, 2009, 12:00 AM

Fight Over Affiliates

(Page 2 of 2)

There are about 168 retailers using sales tax collection software from vendors certified by the SST Governing Board. Those vendors are Avalara, StrikeIron Inc. (SpeedTax service), Exactor Inc. and Automatic Data Processing Inc. “There are probably thousands of other retailers collecting sales tax with their own software,” Peterson adds.

Retailers that want to use their own in-house tax-collection systems can download the sales tax rate for any tax jurisdiction within SST-participating states by entering a nine-digit ZIP code on the state’s web site, he says.

But many e-retailers still reject multi-state tax collection.

“Our online abandonment rates definitely go up when people see a sales tax charged by online merchants, but it’s not only the sales tax that’s a problem,” says Neil Kugelman, CEO of Goldspeed, which for now collects sales tax only on orders from its home state of New York. “It’s bookkeeping and filing, and every state has its own methods. It’s extremely burdensome for retailers to take this on.”

The impact on consumers, however, may not be that bad, says Colin Sebastian, who covers e-commerce stocks as senior vice president of equity research at Lazard Capital Markets. “Our checks with e-commerce companies that already collect sales tax indicate a fairly limited impact on buying trends,” he says, “as the key drivers of e-commerce are convenience and ease of use in addition to good value.”


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