[mynameisvlad]

That’s fair. I’m guessing it’s also state-dependent with each state having its own rules.

I still would disagree on it being framed as “a very small fraction” of payments even given those stipulations.

I would say, from the consumer end, it’s been the exception rather than the rule that I don’t have to pay WA sales tax.

[smca_]

To clarify, Stripe Tax is our product that helps you automatically calculate taxes.

If you'd like to do it yourself, you can manually define rates at no cost: https://stripe.com/docs/billing/taxes/tax-rates.

[hermitcrab]

I use a 'full-service' payment provider. I send the customer to their shopping cart page. The customer buys the software license from them. And they buy the license from me. They are the 'merchant of note' and collect and remit the VAT/sales tax. They pay me once a month, minus fees.

So how does Stripe tax work? Can Stripe function as the 'merchant of note'? If I am based in the UK and selling to someone in the UK, Germany or the US, will it collect and remit the taxes for me? Or just tell me how much I owe?

[mynameisvlad]

Who said anything different or implied they didn’t understand this?

Nobody is arguing that Stripe Tax is not a valuable product, or that the tax landscape is not extremely complicated and worth 0.5% of a transaction.

I am, explicitly, saying that your framing as taxed transactions being “a very small fraction” of US transactions seems false. You are making it sound like the Stripe Tax surcharge will generally speaking not apply to a business, and therefore shouldn’t be used when calculating the amount your company charges.

Do you have anything to back up this claim?

[motoxpro]

From google:

“ Understanding the state sales tax rules for your SaaS business is difficult due to the many different definitions and categorizations. SaaS for personal use is taxable in Louisiana, Maryland, Massachusetts. SaaS for business use is taxable in Nevada, North Dakota, Ohio.”

Meaning that you don’t have to charge tax in the majority of states. Meaning that it can be negligible. IANAL

[khuey]

That's not a complete list (e.g. SaaS is taxed in New York) but there are also large states where it is not taxed (e.g. California).

[mynameisvlad]

From TaxJar, Stripe's own subsidiary, and also the first result on Google:

> Alabama – SaaS is considered a taxable service. Computer software is tangible personal property. (Source)

> Alaska – SaaS is taxable in Alaska. (Source)

> Arizona – SaaS is taxable in Arizona. (Source)

> Connecticut – SaaS is taxable in Connecticut. SaaS for personal use is taxed at the full state rate, but SaaS for business use is only taxed at the rate of 1%. (Source)

> Hawaii – SaaS (and computer services) is taxable in Hawaii. Hawaii’s general excise tax applies to every good and service not tax exempt. (Source)

> Iowa – SaaS is taxable, except when being used for business purposes, then it is exempt. (Source)

> Louisiana – SaaS is taxable. (Source)

> Massachusetts – SaaS and cloud computing are taxable in Massachusetts. (Source)

> New Mexico – SaaS is taxable in New Mexico. (Source)

> New York – SaaS is taxable in New York. (Source)

> Ohio – SaaS is taxable for business use in Ohio and non-taxable for personal use. (Source)

> Pennsylvania – SaaS is taxable in Pennsylvania. (Source)

> Rhode Island – SaaS is taxable in Rhode Island. (Source)

> South Carolina – SaaS is considered a taxable service in South Carolina, as are other charges to access a website. (Source)

> South Dakota – SaaS is considered a taxable service in South Dakota, as are other charges to access software. (Source)

> Tennessee – SaaS is taxable in Tennessee. (Source)

> Texas – SaaS is considered part of a data processing service in Texas and is 80% taxable and 20% exempt from sales tax. (Source)

> Utah – SaaS is taxable in Utah. (Source)

> Washington – SaaS is taxable in Washington since all software, delivered by whatever means, is considered taxable in the state. (Source)

> Washington D.C. – SaaS is considered a taxable service in Washington D.C. (Source)

> West Virginia – SaaS is considered a taxable service in West Virginia. (Source)

https://www.taxjar.com/sales-tax/saas-sales-tax

SaaS is also far from the only industry Stripe serves. But even if it were, close to half the states require taxes on it in some way, shape or form. Meaning it's not nearly as negligible as you're making it seem.

I also want to reiterate the bar is "very small fraction of total payment volume". Very small really implies single or low double digit percentage. While some of the biggest states are missing, you still have around 40% of the population represented in those states. It seems very unlikely, even with tech's concentration in California, that 40% of the population results in "very small fraction of total payment volume".