Making sales tax less taxing.

Automating Your Sales Tax Compliance Requirements for AspDotNetStoreFront

Matthew GrattanOEM-ISV Channel Director

Taxable or Non-Taxable in NY?

Taxable or Non-Taxable in NY?

Taxable or Non-Taxable in CA?

Download Adobe Acrobat 9 Pro Extended

https://www.adobe.com/downloads/

Taxable or Non-Taxable in CA?

Taxable or Non-Taxable in CA?

Download Adobe Acrobat 9 Pro Extended

https://www.adobe.com/downloads/

What is Nexus?

Challenges and Complexity of Sales Tax Compliance

Shortfalls of Manual Compliance Processes

‘Bullet-Proof’ Sales Tax Compliance with Avalara

Demo

Q & A Session

The Agenda

States define Nexus as a ‘tangible physical presence’ which creates the requirement to collect & remit Sales Tax. Laws surrounding what constitutes Nexus vary state-to-state. Some examples include:

Salespeople

Agents or Distributors

Employees on Payroll

Training

Trade Show Attendance

Inventory / Warehousing

Servicing Tangible Personal Property

What is Nexus?

Sales Tax is a statutory requirement» Audit Penalty & Loss

100% non-revenue generating activity

Manual sales tax management:» Labor-intensive » Leads to inaccurate results» Costs $1,000s

Complexity» Compliance process – calculate, report, return, remit» 15,000+ taxing jurisdictions» Thousands of changes to tax laws, including:

• Jurisdictional rate changes• Tax holidays• Jurisdictions that levy new taxes/eliminate taxes• Jurisdictions that expand geographic boundaries

Challenges of Sales & Use Tax Compliance

A ZIP+4 or street segment:

May cross a county and/or municipality boundary

Are not assigned to all physical streets, just those which the post office delivers

Can change on a monthly basis

There are over 40,000,000 ZIP+4’s nationwide

There are over 600,000 monthly changes to the ZIP+4 file

Rates tables are only accurate 60% - 70% of the time nationwide

Why are Zip Codes Ineffective in Determining Tax Jurisdictions?

7.85%

4.35%

4.35%

6.85%

7.72%

7.35%

5.10%

80111 Taxes Represented:2.9% Colorado State.25% Arapahoe County1.0% Douglas County3.5% Englewood City3.0% Greenwood Village City2.5% Centennial City1.0% Regional Transport District.10% Football District.10% Science and Cultural District

Product Taxability in States & Jurisdictions is not consistent throughout the United States» The following industries have varying taxability rules:

• Software / Hardware • Digital Goods • Services• Medical device / equipment • Food / Beverage • Clothing / Apparel• School Related Products • And many other industries / products!

Understanding Product & Service Taxability Exceptions

70% of businesses surveyed have been audited in the past 3 years » Average penalties: $34,000 per audit

Managing sales tax manually is costly» Under $1M revenue: 13.5% of sales tax dollars collected» $1M to $10M in revenue: 5.2% of sales tax dollar collected

Preparing Returns is costly as well» 33% say preparing and remitting sales/use tax forms takes 24 full

accounting days per year

Manual Compliance Costs *All facts and figures from an independent study of 551 accounting and financial professionals in small to mid sized businesses

Managing Local Tax Tables

Monthly Updates to Zip Files

Copyright © Avalara, Inc. All Rights Reserved.

Burdensome & Audit Risk Prone:»Customers provide invalid certificates; difficult to follow-up

w/customers

» Inadequate process for reviewing certificate validity

»Cannot track certificate expirations and requests

»Billing errors occur due to inaccurate and incomplete cert data

»Lack of reports for certificate exposure and analysis

»Difficult to locate and provide certificates to auditors

»Large, recurring audit assessments

Managing Exemption Certificates Manually?

Simplifying Sales Tax Compliance through Automation» Outsource sales tax requirements» Save time & money» Reduce audit risk

Avalara is the Leader in Web-Based Sales Tax Solutions» Chosen by 10,000 + customers» Trusted provider for 350 million+ calculations annually » Processing over 25,000 returns per month » Remitting more than $16 billion in sale tax filings annually » Recommended by over 2,000 software application

resellers, CPA’s, and business consultants» One of only 4 Certified Service Providers under the

Streamlined Sales Tax (SST) Project

Avalara is Solving the Challenge AvaTax is the fastest, easiest, most accurate and affordable way to calculate, report, return, and remit transactional tax

Sampling of Avalara Clients

Avalara Sales Tax Management Service to Achieve Compliance

Automating Mgt of Exemption Certificates

AvaCert – EASY AS 1-2-3!

1. Lookup Valid Cert

2. Send Cert Request

3. Customer Electronically Submits Valid Cert» AvaCert’s online wizard helps to ensure cert validity

» AvaTax transfers cert data and exempts relevant transactions automatically

Demo

Copyright © Avalara, Inc. All Rights Reserved.

Matthew Grattan | OEM-ISV Channel Director | avalara® direct: 206.826.4900 ext.1138 matthew.grattan@avalara.com

Questions -

Thank you for your time today