TaxJar Raises $600K as Congress Resumes Debate on Internet Sales Tax

When TaxJar CEO Mark Faggiano introduced himself to Bay Area angel investor and 500 Startups co-founder Dave McClure in San Diego recently, he explained that TaxJar is a local Web startup that helps online merchants track how much sales tax to pay, and where to pay it.

“Your life is about to get very interesting,” McClure replied, and Faggiano nodded in agreement.

Congress has been moving slowly but inexorably to enact Internet sales tax legislation that could make online retailing a lot more complicated. Proponents of the proposed Marketplace Fairness Act argue that online sellers currently hold an unfair advantage over traditional brick-and-mortar retailers because online sellers don’t necessarily charge their customers a local sales tax.

Whether Congress will pass the proposed legislation is anybody’s guess, Faggiano says. Nevertheless, the full U.S. House Judiciary Committee is convening in Washington D.C. this morning to hear both supporters and opponents at a hearing on “Exploring Alternative Solutions on the Internet Sales Tax Issue.”

“The general consensus is that something is coming,” Faggiano says. “We’ve come out against this legislation even though it would help our business, because it does not make things any easier.”

The situation already is pretty complicated. How much sales tax an Internet merchant must collect and forward to state and local tax jurisdictions depends on TaxJar logo 2014a number of variables, including where the merchant is based, total annual sales, and whether the merchant has a “presence” in the state where a customer makes a purchase. For example, Faggiano says a new law in Minnesota requires online sellers who maintain some inventory in the Gopher State to collect retail sales tax on sales to Minnesotans, even if the seller is renting or sharing storage space and has no employees in Minnesota.

Faggiano says he founded TaxJar last year to solve the complex problem that Internet sellers face in determining whether local tax rules apply for each order they fill.

TaxJar says its software-as-a-service automatically screens more than 100,000 sales tax rules to

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.