Transaction tax collection system and method

• US 6,993,502 B1
• Filed: 11/10/2000
• Issued: 01/31/2006
• Est. Priority Date: 11/11/1999
• Status: Expired due to Term

• Current Assignee: CCH Incorporated (Wolters Kluwer Nv)
• Original Assignee: CCH Incorporated (Wolters Kluwer Nv)
• Inventors: Blandina, Michael, Gryglewicz, David, Birch, Douglas L.
• Primary Examiner(s): McAllister, Steven B.
• Application Number:
  US09/710,443
• Time in Patent Office: 1,908 Days
• Field of Search: 705/19, 705/31, 705/26, 702/27
• US Class Current: 705/31
• CPC Class Codes: G06Q 20/207 Tax processing
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/123 Tax preparation or submission

Abstract

A system and method for computing and collecting taxes is disclosed. In particular, the invention properly computes and collects, e.g., sales and use taxes that is consistent legal guidelines and restrictions imposed by national governments such as the United States. Accordingly, the invention is useful for computing and collecting taxes on Internet sales.

Claims

1. In a system involved with the collection of taxes related to at least one of sales of goods and services that includes a plurality of customer computers including a first customer computer, a plurality of merchant computers including a first merchant computer associated with a first merchant having a first merchant account, a plurality of merchant bank computers including a first merchant bank computer, a plurality of tax authority designated computers including a first tax authority designated computer associated with a first tax authority having a first tax authority account, and one or more communication networks for enabling communications among the customer computers and the merchant computers and for enabling communications among the merchant computers and the merchant bank computers,

a control system that performs the following operations

communicates with each of the plurality of merchant computers using the one or more communication networks;

communicates with each of the plurality of merchant bank computers using the one or more communication networks;

communicates with each of the plurality of tax authority designated computers using the one or more communication networks;

stores debit information related to authorized debits, wherein each of the authorized debits is for debiting a corresponding one of the plurality of merchant banks;

stores credit information related to providing credits to each of the plurality of tax authority designated computers;

stores merchant information related to each of the plurality of merchants including identities of the merchants;

stores tax authority information related to each of the plurality of tax authorities including identities of the tax authorities;

receives, from each of the plurality of merchant computers, transaction information related to a taxable transaction between the merchant associated with the merchant computer, and another party to the transaction associated with some one of the customer computers, including first transaction information received from the first merchant computer during a same time the first transaction is conducted and said first transaction information including a digital certification for the first merchant for verifying that the first merchant is involved with the, first transaction;

debits at least the first merchant bank computer in a first tax amount related to said first transaction information;

credits said first tax amount to the first tax authority designated computer; and

provides generated reports to the tax authorities associated with the plurality of tax authority designated computers;

wherein related to the first transaction said control system;

validates or invalidates address information associated with the another party to the transaction, said validating invalidating using business rules of the first merchant and includes;

ascertaining whether said first merchant'"'"'s business rules allow for processing of partial address information of the another party to the transaction and, if so, determining if there is a more coarse address processing available and, if so, processing said partial address of the another party to the transaction; and

ascertaining whether said first merchant'"'"'s business rules allow for substituting another address of the another party to the transaction and, if so, determining if there is another address of the another party to the transaction that can be used and, if so, creating a substitute address record of the another party to the transaction; and

determines one or more tax authorities, including at least one of the plurality of the tax authorities, that has a nexus for the address information of the another party to the transaction when it is validated.

2. The control system, as claimed in claim 1, including a main tax gateway and at least a first distributed tax gateway in communication therewith, said main tax gateway storing said debit information, storing said credit information, storing said merchant information and storing said tax authority information.

3. The control system, as claimed in claim 2, wherein:

said main tax gateway being used in debiting the first merchant bank computer in the first tax amount and being used in crediting the first tax amount to the first tax authority designated computer and said main tax gateway further includes;

a merchant related data store including, for each of a plurality of merchants having a corresponding one of the merchant computers, merchant bank information identifying the merchant'"'"'s bank, wherein there is first and second merchant bank information identifying, respectively, the first merchant bank and a second merchant bank for a second merchant, wherein the first and second merchant banks are different, and wherein said merchant related data store is accessed for performing said debits operation.

4. The control system, as claimed in claim 2, wherein:

said first distributed tax gateway is used in receiving said first transaction information.

5. The control system, as claimed in claim 2, wherein:

said first distributed tax gateway includes a first distributed controlling subsystem and in which at least one of said first distributed controlling subsystem and the first merchant computer calculates said first tax amount using a tax collection agent.

6. The control system, as claimed in claim 2, wherein:

said main tax gateway stores first merchant certification information related to certifying communications as being received from the first merchant computer and stores first tax authority certification information related to certifying communications as being received from the first tax authority designated computer.

7. The control system, as claimed in claim 2, wherein:

said main tax subsystem stores first merchant validating information related to validating the identification of the first merchant and stores the authority validating information related to validating the identity of the first tax authority.

8. The control system, as claimed in claim 2, wherein:

said main tax gateway stores information related to requirements as to when the plurality of tax authority designated computers are to be credited with said first tax amount and stores information related to correlating the identity of the first merchant with the identity of the first merchant bank.

9. The control system, as claimed in claim 2, further including:

a plurality of distributed tax gateways different from said first distributed tax gateway and with said plurality of distributed tax gateways and said first distributed tax gateway in communication with said main tax gateway.

10. The control system of claim 2, wherein said main tax gateway includes a tax transaction management system for generating electronic bank to bank transfer notes for transferring funds between the first merchant bank and a bank designated for receiving taxes to be paid by the first merchant.

11. The control system of claim 10, wherein said tax transaction management system generates said electronic bank to bank transfer notes according to an automated clearing house (ACH) procedure provided by a governmental agency.

12. The control system, as claimed in claim 1, wherein:

the one or more communication networks includes the Internet.

13. The control system of claim 1 that includes a network interface for receiving, during the first transaction, a request for determining a tax on the first transaction, and providing a responsive network transmission to the first merchant computer prior to finalizing the first transaction with the first customer.

14. The control system of claim 13 that includes a merchant interaction control system that communicates with at least one of:

(a) a merchant enrollment system for enrolling merchants for receiving taxation related information in response to transaction information merchants supplied to said control system;

(b) a tax computing engine for determining a tax on the first transaction, and (c) a merchant permissions system for authenticating that the first transaction is from the first merchant.

15. The control system of claim 1, wherein said control system receives the first transaction information without the first merchant computer receiving a request for transmitting the first transaction information to said control system.

16. The control system of claim 1, wherein said control system assesses which, if any, of the tax authorities having the nexus is to be considered for taxation using said business rules of the first merchant.

17. In a system involved with the collection of taxes related to at least one of sales of goods and services that includes a plurality of merchant computers including a first merchant computer associated with a first merchant having a first merchant account, a plurality of merchant bank computers including a first merchant bank computer associated with the first merchant, a plurality of tax authority designated computers including a first tax authority designated computer associated with a first tax authority having a first tax authority account, and one or more communication networks for enabling communications at least among the merchant computers and the merchant bank computers,

a control system that performs the following operations:

communicates with each of the plurality of merchant computers using the one or more communication networks;

communicates with each of the plurality of merchant bank computers using the one or more communication networks;

communicates with each of the plurality of tax authority designated computers using the one or more communication networks;

stores merchant information related to each of the plurality of merchants including identities of the merchants;

stores tax authority information related to each of the plurality of tax authorities including identities of the tax authorities;

receives at least transaction information related to a first transaction between the first merchant and another party;

wherein said control system acts according to first business rules obtained from the first merchant and uses nexus information of the first merchant, said first business rules indicating services that said control system is to perform for the first merchant, said nexus information indicating where the first merchant has a physical presence,

(1) said first business rules being related to a tax method to be used and being selected by the first merchant from at least the following business rules;

(a) perform tax calculations for the tax authority selected by the merchant,

(b) perform tax calculations for the tax authority selected by the merchant if specified in a request with sale transaction data from the merchant,

(c) calculate the tax(es) on a total for the corresponding customer purchase, and

(d) calculate the tax(es) for each line item of a corresponding customer purchase separately; and

(2) said first business rules being related to taxes to collect and being selected by the first merchant from at least the following business rules;

(a) do not collect taxes for any tax authorities,

(b) collect all taxes that can be determined using the control system,

(c) collect taxes for states in the United States,

(d) collect taxes for tax authorities for which states also collect taxes on their behalf, and

(e) collect taxes for those tax authorities in which there is an agreement between said control system and said tax authorities for accepting taxes on behalf of the merchant via an automatic clearing house (ACH) electronic transfer of funds; and

(3) said first business rules being related to shipping and being selected by the first merchant from at least the following business rules;

(a) shipping costs are itemized separately on sales orders,

(b) shipping costs are not itemized separately on sales orders,

(c) a product sales price includes shipping charges, and

(d) product sales price does not include shipping charges.

19. The control system of claim 17, wherein said first business rules are provided to said control system as part of enrollment of the first merchant.

20. The control system of claim 17, wherein said control system verifies that the first merchant is enrolled when the first merchant attempts to access said control system.

21. The control system of claim 17, wherein said control system performs verification for the first merchant by retrieving an identification record of the first merchant.

22. The control system of claim 17, wherein said nexus information is used to determine which, if any, of the plurality of tax authorities the first merchant is to obtain taxes.

18. In a system involved with the collection of taxes related to at least one of sales of goods and services that includes a network interface, a plurality of customer computers including a first customer computer, a plurality of merchant computers including a first merchant computer associated with a first merchant having a first merchant account, a plurality of merchant bank computers including a first merchant bank computer, a plurality of tax authority designated computers including a first tax authority designated computer associated with a first tax authority having a first tax authority account, and one or more communication networks for enabling communications among the customer computers and the merchant computers and for enabling communications among the merchant computers and the merchant bank computers,

a control system that performs the following operations:

communicates with each of the plurality of merchant computers using the one or more communication networks;

communicates with each of the plurality of merchant bank computers using the one or more communication networks;

communicates with each of the plurality of tax authority designated computers using the one or more communication networks;

stores debit information related to authorized debits, wherein each of the authorized debits is for debiting a corresponding one of the plurality of merchant banks;

stores credit information related to providing credits to each of the plurality of tax authority designated computers;

stores merchant information related to each of the plurality of merchants including identities of the merchants;

stores tax authority information related to each of the plurality of tax authorities including identities of the tax authorities;

receives, from each of the plurality of merchant computers, transaction information related to a taxable transaction between the merchant associated with the merchant computer, and another party to the transaction associated with some one of the customer computers, including first transaction information received from the first merchant computer during a same time said first transaction is conducted, said network interface receiving, during said first transaction, a request for determining a tax on said first transaction, and providing a responsive network transmission to the first merchant computer prior to finalizing said first transaction with a first customer;

debits at least the first merchant bank computer in a first tax amount related to said first transaction information;

credits said first tax amount to the first tax authority designated computer; and

provides generated reports to the tax authorities associated with the plurality of tax authority designated computers;

wherein said control system uses first and second nexus information of the first merchant and a second merchant, respectively, indicating where the first and second merchant has a physical presence and said control system uses a first set of business rules obtained from the first merchant and a second set of business rules obtained from the second merchant, said first set of business rules being used in determining a response to receiving said first transaction information, said first set of business rules being selected by the first merchant from a first number of business rules related to a tax method to be used, a second number of business rules related to taxes to collect, and a third number of business rules related to shipping, said first set of business rules comprised of at least one of said first number of business rules, at least one of said second number of business rules and at least one of said third number of business rules, said second set of business rules being selected by the second merchant from said first, second, and third numbers of business rules, said second set of business rules comprised of at least one of said first number of business rules, at least one of said second number of business rules, and at least one of said third number of business rules, and in which a plurality of said first set of business rules is different than said second set of business rules when said first nexus information is the same as said second nexus information, said first set of business rules selected by the first merchant and said second set of business rules selected by the second merchant being used in determining how said system calculates taxes for the first and second merchants, respectively, being used in identifying tax authorities, if any, for which taxes are to be collected and what taxes, if any, are to be collected, and in which said first set of business rules selected by the first merchant includes;

perform tax calculations for the tax authority selected by the first merchant if specified in a request with sale transaction data from the first merchant, collect taxes for those tax authorities in which there is an agreement between said control system and said tax authorities for accepting taxes on behalf of the merchant via an automatic clearing house (ACH) electronic transfer of funds, and itemize shipping costs separately on sales orders; and

the second set of business rules selected by the second merchant includes;

calculate the tax(es) on a total for the corresponding customer purchase, do not collect taxes for any tax authorities, and shipping costs are not itemized separately on sales orders.