PowerPoint Presentation

Ray Bigley VP Business Development; AvalaraAndrew Johnson Partner; Peisner Johnson & CompanyExpanding Your Digital Value Via StateAnd Local Tax Advisory ServicesDecember 6, 2013 AvalaraMaking sales tax less taxing.2Market Forces & Evolving Markets

Market Place Fairness Act (67 to 29)

Peisner Johnson & Company Client Service Opportunities

Summary

Todays DiscussionMaking sales tax less taxing.3$107,000,000,000$55,000,000,000$130,000,000,000Making sales tax less taxing.Market Forces: State Budget Gap

Making sales tax less taxing.Graphic of state revenue gaps4State Budget Gaps

Making sales tax less taxing.State revenue gaps5$12,500,000,000$23,800,000,000Market Forces: State Budget GapMaking sales tax less taxing.Revenue short falls of uncollected sales tax somewhere between these two numbers6Market Forces46 States, WA DC & GuamMaking sales tax less taxing.Sales tax insituted--- up for discussion Bottom line 46 states , then Alaska has Burroughs taxes Grew from states to 11,000 taxing jurisdictions.78Sales & Use Taxes In LOTS of Jurisdictions

46 States (Including The District of Columbia) have some form of Sales And Use TaxNOMAD States No Sales Tax in NH, OR, MT, AK, DEAlaska has no State Sales Tax, But does have Local Sales Taxes

There are over 11,000 North American Taxing JurisdictionsMaking sales tax less taxing.

Evolving Markets Mobile payments (Affirm, Square, GoPayment, Fortumo, Zong)

Gaming ( mobile devices, Xbox, PlayStation, Wii)

Making sales tax less taxing.Capitalism at work--- Sales tax not a zero sum market. Brick and motor now ecommerce Internet sales --- Whats the future? Mobile, gaming, etc.9Omni channel Markets: Mobile 10

Making sales tax less taxing.Selling product on a tradeshow floorFarmers marketsArt showsBand t-shirts productsEvent ticket sales

10Emerging Markets Gaming, Mobile Payment11

Making sales tax less taxing.

Making sales tax less taxing.Avalara is the easiest way to solve the problem12Omni channel Markets: Gaming

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Making sales tax less taxing.14Next up after Marketplace Fairness?

Digital Goods MP3 Files, Movie / TV downloads, Purchased Image, etc.

Virtual Items Exist within a specified environment. Example -Xbox Live marketplace, MapleStory: Flower bouquets, Games-weapons

Sheldons dilemma from the Big Bang TheoryMaking sales tax less taxing.Grants authority to states to require a remote retailer to collect sales tax

Defines a remote retailer as any seller who makes interstate sales of products or services

Applies only to remote retailers with annual remote sales in excess of $1 million, but remote sales includes exempt sales

Requires very little simplification from states, and most of that is only for remote retailersMarketplace Fairness Act (67 to 29)

Very Brief OverviewMaking sales tax less taxing.Sales tax insituted--- up for discussion Bottom line 46 states , then Alaska has Burroughs taxes Grew from states to 11,000 taxing jurisdictions.15Andrew (Andy) Johnson Peisner Johnson & Company, LLPMaking sales tax less taxing.Sales tax insituted--- up for discussion Bottom line 46 states , then Alaska has Burroughs taxes Grew from states to 11,000 taxing jurisdictions.16NexusTax Rates and TaxabilityUse TaxExemption CertificatesTax ReturnsThe 5-Point AssessmentNexusWhat is nexus?Nexus: A connection; a link or tieMinimum level of physical presence that allows a jurisdiction to require you to register, collect, and remit sales and use taxObviousLess ObviousAuditing your customersSharing with IRS and other statesSpecial task forcesLeadsFormer employeesCompetitorsHow do states find you?THE PROBLEM NEVER GOES AWAY

IT ONLY GETS BIGGERAnalyze the Nexus FootprintAssessment #1Tax Rates and TaxabilityUnder-CollectingSomething taxable in one jurisdiction may not be taxable in another...

Except when it is.

Rules are constantly changing - more than 5,000 changes in the last year aloneFundamentalsTangible Personal Property (TPP) Only CERTAIN services are taxableFundamentalsALL sales of TPP are taxable unless there is a specific exemption for that item.

What about digital products?

Make Sure Clients Charging Tax on Taxable Stuff at the Right RateAssessment #2Use TaxesOnline PurchasesPutting Your System in Place

Decide who should manage use tax accrualAccounts payable departmentPurchasing departmentService opportunity for CPAsAccruing Use TaxMake sure clients have a system for accruing use tax on taxable purchases dont overpay thoughAssessment #3Exemption CertificatesExemption Certificates Are Low-Hanging FruitSamplingReview certificates actually collected by client.Assessment #4

Tax ReturnsScreenshot/CBS

Review returns filedAssessment #5

Protect Your ClientsNexusTax Rates and TaxabilityUse TaxExemption CertificatesTax ReturnsThe 5 Point Assessment:PeisnerJohnson.comTrainingSALTsource newsletterBlogCharts and white papersWho is Avalara49Market Leader in Automated Sales & Use Tax Located on Bainbridge Island, WA & Seattle Offices across North America, in EU & Asia

11,000 customers 60,000 registered users

4 million calculations per day approaching 1.5 billion annually

Manage 5 million exemption certificates & file 500,000 sales tax returns

Filing & remitting $14 billion in sales & use tax annually

Original member Streamline sales tax & Certified provider

Making sales tax less taxing.50Questionsandrewj@peisnerjohnson.comray.bigley@avalara.com

Making sales tax less taxing.