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2014 Review of Avalara Sales Tax Systems

Avalara is a company that specializes in creating end-to-end solutions for helping organizations of all sizes comply with transaction-based taxes like sales and use tax, value added tax (VAT), and Canada’s GST/HST in over 100 countries, including thousands of state and local special tax districts within these countries.

Brian Tankersley

Jun. 11, 2014

91105-33425858691

Avalara is a company that specializes in creating end-to-end solutions for helping organizations of all sizes comply with transaction-based taxes like sales and use tax, value added tax (VAT), and Canada’s GST/HST in over 100 countries, including thousands of state and local special tax districts within these countries.

In 2013, Avalara remitted $12 billion to tax jurisdictions, filed over 400,000 returns in over 100 countries, managed over five million exemption certificates and created or maintained software integrations between its compliance platform and over accounting, ERP, eCommerce, and POS applications. Avalara’s major solutions included in this review are:

  • AvaTax Calc determines what taxes may apply to a transaction based on the item sold, the location where it was sold or shipped, and the company’s nexus settings.  The application is a web service which integrates with over 300 accounting, ERP, e-commerce, and point-of-sale applications, and it includes historical and future rate information for over 12,000 jurisdictions in the US.  Calculations are available for over 100 different countries, including taxes such as GST/HST in Canada.
  • AvaTax Certs captures, stores, and tracks the expiration and renewal of resale and tax exemption certificates for non-taxable transactions throughout an organization, and its pricing varies depending on how many certificates are to be managed.  These tools can be used when gathering either paper or electronic documents, and the application can request certificates by e-mail, and recipients can electronically sign the certificates by using a mouse.  A free version of the AvaTax Certs app for small businesses with limited requirements, AvaTax CertsExpress, allows users to send, receive, and manage a limited number of exemption certificates.
  • Avalara MatrixMaster is a specialized subscription database of over ten million product UPC codes which is used by sellers to determine the taxability of items sold at retail in thousands of jurisdictions.
  • AvaTax Returns helps firms track, prepare, file, store, and retrieve sales tax returns.  The application provides electronic filing and remittance of sales and use tax in some states, and it allows users to prepare returns for paper filing where required.
  • AvaTax TrustFile is a tool for automating state-mandated e-filing and e-payment of sales tax returns, and is available in a cloud version or a legacy Windows desktop solution. TrustFile Desktop 2014 supports 12 states (CT, FL, GA, IL, KS, LA, MD, NJ. PA, SC, TN, and WI)

The company also offers a wide range of other solutions not considered in this review, including compliance tools for personal property tax, 1099 reporting, and motor fuel taxes.

Avalara has a number of programs and product offerings for accounting professionals and tax consultants, including the Avalara Accounting & Advisory Services Program, which is free to most practitioners.  For more information on this program, visit www.avalara.com/aasp, or call 877.780.4848.

AvaTax is a leader in the sales and use tax compliance arena, and is one of two solutions reviewed which is a Streamlined Sales Tax Certified Service Provider.  (Streamlined sales tax is a coalition of 24 states which allows, and in some cases requires, sellers to charge sales tax based on the destination of a product and not the point from which it was sold/shipped.)  AvaTax’s long list of capabilities and features, including real-time integrations with over 300 applications, a constantly updated comprehensive database of addresses, frequently updated geospatial descriptions of tax jurisdiction boundaries, comprehensive list of tax jurisdictions and tax rates, guaranteed accurate tax calculations, and outsourced services for filing returns is impressive.  Firms and companies can use AvaTax to perform almost any sales tax related tasks, either as a comprehensive end-to-end solution, or as a la carte solutions for different parts of the tax compliance process.

Best Firm Fit:

  • Organizations which must comply or help others comply with sales and use tax, VAT, and similar tax regimes in over 100 countries around the world.
  • Firms and clients that want the flexibility to outsource jurisdiction identification and tax calculation from within over 300 accounting, ERP, and eCommerce solutions.
  • Organizations that want to collect and manage exemption certificate compliance
  • Firms and clients who want to outsource return preparation and compliance to a third party for either premises-based sales and use tax or streamlined sales tax.

Strengths

  • AvaTax Calc verifies address against a constantly updated database of addresses, tax rates, and jurisdiction boundaries, and it has direct integrations for use as a sales and use tax engine for over 300 accounting, ERP, e-commerce, and point of sale applications.
  • AvaTax Calc is one of the only applications which can determine the tax jurisdictions based on latitude and longitude coordinates for construction sites and other locations where a street address is not available.
  • AvaTax Certs allows customers to electronically request exemption certificates via e-mail, and allows recipients to sign digital exemption certificates with a mouse.
  • AvaTax Certs has tools for exporting exemption certificates en masse for use in audits.
  • AvaTax MatrixMaster is a subscription database for retailers which allows them to determine and update the taxability of over ten million items in thousands of jurisdictions based on a product’s UPC code.
  • AvaTax Returns supports preparation of returns for all U.S. tax jurisdictions, although returns cannot be prepared unless the transaction level sales tax was calculated using AvaTax Calc.
  • An online version of AvaTax TrustFile is available as a free sales tax compliance solution for small e-commerce sellers who use Amazon Fulfillment and PayPal.

Potential Limitations

  • The application is designed primarily for use by companies as part of ongoing transaction processing, and it does not include built-in self-prepared e-filing or payment options.

Summary & Pricing

Avalara is one of the established leaders in the SaaS sales and use tax compliance space, and its AvaTax and TrustFile offerings provide information for over 12,000 US sales and use tax jurisdictions.  The company’s comprehensive suite of solutions and services includes tools needed for almost any business, from a start-up home-based Internet seller all the way up to a multinational corporation that needs end-to-end compliance tools in dozens of countries.

The company’s free services for small businesses, including free tax rate tables (AvaTax Rates), a free exemption certificate manager (AvaTax CertExpress), an accountant program, and an online version of AvaTax Calc for small online sellers, are unparalleled.