No open source community has been able to convince enough programmers and tax lawyers to do such a supermassive amount of tedious and boring work for free. This is also an area where being 99.9% correct isn’t good enough and you’re working with thousands of insane clients who constantly change their APIs and specifications. You practically need to have a government or private business develop such a thing.
Oh, I don't know, if the data-structure was easy to understand (and contribute to) it might be fun to have a comprehensive representation of the tax code to play with. It's also a problem that lends itself to "local first" attempts - I can see an individual might try to encode rules about their local sales tax and property taxes.
Another approach would be to have a programming competition to see who can write the best in-browser, privacy respecting 2022 1040EZ application using nothing but html, css, svg, and javascript[0]. The end product should be capable of saving its state as a single json object, and producing a usable PDF. One might host such an application as a public utility. A good test suite would model the 1040 historically to make sure the app can reach all states characteristic of the problem, and produce the correct result. On macos you might want to bundle it all in an app, include Chrome, the resources, the data and any generated PDFs.
This would be relatively low-effort and could have real impact on, e.g., TurboTax. Heck, I'd use it. I bet a lot of people here would. Here (https://github.com/b-k/1040.js) is one person who took a serious stab at a part of this, the calculations themselves!
It's sales and value added taxes that are the issue. Some places are really easy, others are difficult, the rules depend on your location, your business other potential nexuses, and the location of the customer. Once collected, the taxes must be remitted properly before the due date. You may need a tax account for every nexus. To submit the returns electronically either requires scraping websites or convincing the government to let you send them another kind of method, perhaps using EDI formats or their own XML or other weird formats.
Agreed. I live in Washington DC. Generally, our tax code tries to push more of the burden on to tourists and less on average residents, with business interests falling somewhere in the middle. How we do that gets really complicated.
1040s are much simpler than other taxes. Let's look at sales tax. Imagine you stop by my corner store and pick up a can of Coke, a bottle of beer, a pack of tampons, and a pair of gloves. The respective tax rates will be 8%, 10.25%, 0%, and 6%.
Here’s a fun one - import duties. If we ignore sales taxes for a minute, the real problem with duties isn’t calculating a number, it’s knowing which classification applies. You often have a giant table or spreadsheet of product codes and duties, but the hard part can be figuring out which products have which duties applied. Companies often pick the lowest duty or tax rating they can get away with, but in ambiguous cases, governments can use courts or regulations to insist on a particular interpretation for a particular time period and sometimes the rules even differ based on who is doing the importing for various legal reasons.
Now, the obvious answer then is that for most online stores, somebody picks a product classification at random or relies on a third-party service that matches a product description to a classification. Most of the time, getting it wrong has few consequences unless you’ve been informed of the problematic item and the same government sees a misclassification more than once, or wants to make a point with your shipment vs others. After all, saying others get away with it doesn’t absolve your need to try and get declarations and duties correct.
Now, I’m not going to say that there isn’t room for open source here, I could totally see how making, for example, an AI that can look at product description and product appearance and try to classify it for duties would be amazing work if done in open source. I’m just pointing out that the topic is complicated, especially when considering that the same item might have different duties if manufactured in different locations or sold under different circumstances.
Governments are unbelievably complicated even as their systems still don’t mirror or match the real world correctly.
Import duties don't just depend on the classification in the nomenclature. It also depends on its value and its origin, which also are sometimes really hard to determine. The origin isn't just where the product is shipped from.
As for the classification, it gets complicated. Sometimes it goes beyond what the product is at the moment of the importation. Say you're shipping fruits, well depending on whether they're for eating as-is, or for juicing once imported, the classification (and thus the import duties) will be different. It's also hard to classify a product that's hybrid (like a ceiling fan with a LED light, is it a fan or a pendant light ?) or a brand new kind of product.
If you have a doubt, you can ask the customs to find the right origin or classification for you, though you might not be happy with the duties they apply. But mostly, it takes weeks to get one and I've seen companies doing their declaration just the day before their shipment arrives.
And even then, different customs officers might classify the same products differently even though they work in the same economic union.
> Companies often pick the lowest duty or tax rating they can get away with
I've seen companies picking the highest duty when they have a doubt, thinking they might get less in trouble or at least don't have to pay the difference if they get caught. Because when they do, the customs can audit your whole import history, and make you pay the difference for every product misclassified (iirc they can go back up to five years) and that can be devastating.
In general, from what I've seen, the task of product classification is so hard that no time is spent trying to optimize sourcing or the nature of the product to pay less duties. In a company the department in charge of customs declarations is always seen as a cost center. The only example I know is Converse importing their sneakers as slippers[1].
And not only is the problem complicated, but some of the most important documentation is only available on subscription. The EU has an open-data policy and a most data on duties can be found[2]. But the World Customs Organization makes you pay for a lot of essential information that can't be reproduced[3].
There is no open RSS/XML/API feed you can subscribe to from each country to get an update of their accounting rules. You have to constantly monitor all news from all over the world. This is labor intensive. The only solution is a network of local tax specialists. Like the big-4 accounting firms have.
I mean you have issues with convincing the U.S. government to provide pre-filled easy-taxes for W-2(+401k contribution) employees. I would say that you would find even more pressure in other countries.
Even if the pipe dream of getting all global governments to provide an API to determine taxes appropriately, there's almost certainly still a business niche aggregating and normalising all those APIs that Open Source probably won't scratch well enough to be able to rely on for tax compliance purposes. Just in the US there are more than 50 "gov tax agencies" (state and federal) that won't (without a very strong federal mandate) all use the same API. Now multiply that over all 200+ countries in the world, and try an imagine any open source dev (or team) writing and maintaining something that stays on top of all the individual "gov tax agencies" you might need to comply with?
Hell, even if an open source project _did_ successfully create and set up a community to maintain that, I bet you could make a profitable business on top of it just by insuring/indemnifying enterprise customers who use your version of it as a SaaS offering. (Something Amazon could easily do...)
