July 15, 2010, 6:15 PM

TaxCloud launches as a web-based service to calculate and remit sales tax

The SaaS application from FedTax.net is free to retailers and handles 13,000 tax jurisdictions.

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The Federal Tax Authority, a private company also known as FedTax.net, launched this month a software-as-as-service application designed to calculate the sales tax on online purchases for more than 13,000 state and local taxing jurisdictions. The service, which is free to retailers, is designed to integrate with virtually any online shopping cart and back-end accounting software application, says R. David Campbell, co-founder and CEO.

“A merchant using TaxCloud doesn’t have to know anything about sales taxes other than where it’s shipping from, where the customer’s destination is, and the class of goods the customer is buying,” Campbell says. He adds that, for most retailers, it should take about 20 minutes to sign up for TaxCloud and begin using it to calculate and remit sales tax.

FedTax.net will earn its revenue from states, taking from 2% to 8% of the sales tax revenue that merchants collect with TaxCloud, Campbell says.

He adds that TaxCloud maintains its databases in Amazon.com Inc.’s EC2 Internet-based cloud computing environment.

Campbell says he and other founders entered the hosted software market from outside the tax and accounting industry. Before co-founding FedTax.net early last year, Campbell had run two other companies he had also founded: Deep9 Corp., a provider of secure remote storage of corporate data, and Punch Networks, a provider of Internet-based data storage.

Paul Onnen, a co-founder of FedTax.net and its chief technology officer, is a former executive at several businesses including Nordstrom.com, Google, Expedia, WebMD and Intel.

The TaxCloud application is designed to work with states that are members of the Streamlined Sales and Use Tax Agreement, or SST, which has established common policies for processing sales tax across state borders on sales by Internet and catalog merchants. There are currently 23 full members of the SST, with Georgia due to join in January as the 24th member.  There are 45 states with a sales tax, plus Washington, DC, and some cities in Alaska.

The SST’s Governing Board has certified FedTax.net and five other companies as providers of software for calculating and remitting state and local sales tax, though FedTax.net is the only one to offer a SaaS-based application that is completely free to retailers. The other certified software vendors are Avalara Inc., AccurateTax.com, Exactor Inc., Automatic Data Processing Inc. and SpeedTax Inc.


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