Sunday, August 4, 2019

Will Zip Codes Become Obsolete And Be Replaced By Geolocation?

They've been around for as long as I can remember, since my parents were in grade school, actually. They're zip codes, five-digit numbers that allow the U.S. Postal service to route mail to district sorting facilities and on to local delivery offices, and finally to your home. And quite a few years back a four-digit extension was added in an effort to improve efficiency. But, someday, zip codes may become a thing of the past.

A few months back, I wrote about the problems that Nodaway County residents who live outside the city of Maryville's might face with the implementation of a municipal online sales tax and how they might actually be overcharged sales tax based upon the city zip code assigned to them. Actually, "might" was too weak a word. "Would" was the appropriate word to use. I tested the theory recently by attempting to order online. I went so far as to inform the retailer that even though my legal address said "Maryville" and had the zip code 64468, I actually lived 8.5 miles outside that city and therefore was exempt from the city's online use tax. Their response? "Sorry, but our system uses zip codes to designate the taxes we charge." *Sigh* They lost a sale. This problem is not new. It has been happening for some time,  even before online use taxes came into play, but the addition of online use taxes has only magnified the problem.

A zip code isn't just about community identity, although it is one way for an incorporated town to stand out from its neighbors. But, when it comes down to higher auto insurance rates being charged because a person's mailing address is a larger neighboring city rather than the actual smaller community they live in, or when a consumer is overcharged online sales tax by a vendor because their city and zip code don't accurately reflect the town they actually live in, or when 911 service systems read a person's legal mailing address and don't know that help needs to be sent to a different town, then things get serious, financially and personally.

Thankfully, here in Nodaway County, at least for our town, our district commissioner called a few years ago and specifically requested the names and addresses of everyone in our little community so that the 911 system could be adjusted to ensure help could reach us should it be requested. Of course, since that original call, people have moved into town, others have moved out of town, names have changed, property has transferred. So, it's still a good idea to specify the town you're actually in should you require medical help. The medical bills will have no problem finding you, so don't stress about that. It all gets very confusing. I am glad our commissioner took the initiative to get the 911 system the right information. I hope the other commissioners did the same for their constituents. Now, if they could just get the U.S. Postal Service to respond quickly and appropriately to requests for zip code updates, things would improve. Is it really that hard to get a zip code assigned? Apparently it is. From what I have been reading online, the standard answer in the past, when a request was made for any number of reasons, was "No." Well, fine. It doesn't seem that trend has changed. Maybe there's something new on the horizon that may make zip codes obsolete for everyone.

It turns out there is, and it's growing in popularity. With more than 11,000 taxing jurisdictions, and the number rising all the time, businesses are turning to a more robust option to ensure that they don't inadvertently charge the wrong sales tax rates, and that they can more accurately target deliveries to the right places. It's called geolocation. It's been around a while but it's making the use of zip codes, which were never designed for use by businesses as a data point for taxation, ineffective. There is software on the market that use geolocation sales tax APIs  to help businesses charge the right tax so they don't overcharge their customers or, worse, undercharge them and end up owing a big tax bill when the accounting period comes around. Unfortunately, too many retailers' outdated systems still use zip codes to apply taxes. Ugh!

For the post office, zip codes are about sorting and delivering, but for businesses who have to make sales and charge and remit taxes, geolocation makes more sense. If Google can pinpoint my address on a map without benefit of a zip code, why shouldn't retailers do the same? Geolocation can also help shipping companies more accurately target their deliveries and just may help reduce the amount of shipping and billing fraud that occurs in e-commerce. This was an issue I was unaware of, but it's apparently happening and there are some states, and more specifically cities, in the U.S. that are flagged as "high risk" for such fraud.

So, are zip codes becoming obsolete? As for me, one of those people who lives in a town that does not have its own zip code, a town which was incorporated in 1906 but whose post office closed a decade before zip codes were in use, I hope so. This article gives a good idea how zip codes and place names can equal confusion. Geolocation in this era of satellites, longitude and latitude, for the purposes of making purchases and shipping goods make more sense. I mean, one can, with the right geolocation information, pinpoint a campsite in the middle of a desert. If Amazon can improve their unmanned drone services and deliver larger quantities of supplies, campers and hikers can replenish their dehydrated food supplies, water, etc., and stay out on the trail longer, and be taxed the appropriate rate for the actual location from which the sale was made and to which the goods are delivered. And, as for all those lateral movers, those snowbirds, and full-time RVers it's a win-win, especially if you do your ordering from and shipping to locations that have no online or local sales tax. I wonder what the taxation rate is in the desert? Any desert will do for a sample.

*Note: I am not an affiliate nor do I receive any remuneration from those sites or publishers linked above. They're just sources of information. Good information, I think.

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