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How Prentke Romich Company Automated Sales Tax
What QAD Users Need to Know About Managing Sales Tax
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© Avalara
Making sales tax less taxing
Introduction
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Mike AlpertMike Alpert is the Strategic Alliances Manager with Avalara focusing on Avalara's product integrations with QAD. Mike performed his first ERP implementation beginning in 1991 while working for Accenture. Since then, his experience involves a variety of roles in the software industry including developer, development manager, business development, project management, and sales.
Mary BingMary Bing is the IT Director at Prentke Romich Company (PRC), an employee owned company in Wooster, Ohio that designs and manufacturers technology products for people with speech disabilities. Since 1999, Mary had guided PRC IT strategy, including implementing QAD and Avalara’s AvaTax. She also serves as Chair of the ESOP Communications Committee, a position she’s held since 2008.
CONFIDENTIAL & PROPRIETARY |
© Avalara
1. Sales Tax is Hard2. You Try It3. How PRC Conquered Sales Tax4. About Avalara5. Questions and Contacts
What we’ll cover
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Making sales tax less taxing
100,000 + distinct taxability rules
Exempt Products
Exempt Organizations
Tax Holidays
Thousands of changes each year
State-provided info often missing, misleading, or wrong
Sourcing rules14,700+ distinct tax jurisdictions in North America
Nexus rules
Situs
E-commerce rules
Destination based
Origin based
Home Rule States
Hybrid sourcingZip codes don’t match tax jurisdictions
Sales tax is hard.
Making sales tax less taxing 5
Sales Tax: The Challenge
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Do I have to collect (and if so, for whom)?
How do I know what to charge(and is that info accurate)?
How do I register, report, and remit?
For what do I have to collect?
YOUARE
HERE
Making sales tax less taxing
• 150+ million mailing addresses
• 11,000+ jurisdictional rules
• 35,000+ sales / use / rental tax rates
• ~ 30 M product / service exemptions
• 750,000+ buyer / seller exemptions
Making sales tax less taxing
Understanding nexus.Knowing where you need to collect.
“Nexus” describes the connection between a state and a business
Having nexus allows a state government to require an out-of-state company to register and collect tax
The out-of-state company must have “physical presence” – but that definition is ambiguous and always up to interpretation
Making sales tax less taxing
Understanding sourcing rules – “situs”.
Origin-based states for products (destination-based for services)
Arizona, Illinois, Missouri, New Mexico, Ohio, Pennsylvania, Tennessee, Utah, Virginia
Mixed source states
CaliforniaI Counties are origin-
based; Cities & STJs are destination-based
I Services are always destination-based
Texas I Cities and counties are
origin-based based; STJs are destination-based
I Some services are destination-based
Destination-based states
All the Rest
Making sales tax less taxing
Product and Service Taxability
What is taxable in one state, may be exempt in another
Check with each jurisdiction for unique product taxability laws
I Product taxability laws are not consistent
I Similar products might be taxed differently
I Different industries have varying taxability rules
TaxableNon-taxable
Making sales tax less taxing 10
You Try It – Find the Tax Rate
• Seller:– Avalara
100 Ravine LaneBainbridge Island, WA 98110
– Assumption: Seller has Nexus in Missouri
• Buyer:– American Business Futures (ABF)
1111 E BroadwayColumbia, MO 65201
– Assumption: ABF is non-Exempt
• Product: Canned Software, Shipped on Disc
What is the Correct Tax Rate?
Making sales tax less taxing 11
The Answer Is…
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Making sales tax less taxing 12
4.725%
But Wait…There’s More!
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Making sales tax less taxing
Prentke Romich Company
Pioneers in the field of assistive technology and augmentative communication for people with speech disabilities
Making sales tax less taxing
Who is PRC?
• Pioneer in the field of using technology to help people with speech disabilities
• Design, manufacture, and repair hi-tech medical products• Provide services to support language acquisition• 140 employee owners• 5 divisions
Making sales tax less taxing 15
PRC Locations
• PRC, located in Wooster, OH, has field representatives in about 36 states, giving them a presence and nexus
• Saltillo, located in Millersburg, OH has field representatives in 7 states
• Subsidiaries in UK, Germany and Australia
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Making sales tax less taxing
PRC Systems
• QAD – SSM, PCO/PCR, Vertex– Installed in 2004
• Subscription service websites (available in US, UK and Australia)AAC Language Lab – Therapy materials & lesson plans
iShare PRC – File sharing and data storage
Realize Language – Analysis of language samples
Making sales tax less taxing 17
Saltillo Systems
• Quickbooks Pro• Ecommerce site
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Making sales tax less taxing 18
Factors driving change
• Rapid growth in nexus for Saltillo• Vertex license limited to one server connection• Building out services websites• Adding UK and Australia to services websites
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Making sales tax less taxing
Objectives
• Provide tax solution for a subsidiary running Quickbooks• Provide tax solution for website subscription services• Provide VAT tax solution for subscription services in the
UK and Germany• Centralize sales tax management and transaction
records• Automate returns and gain efficiencies in accounting
department
Making sales tax less taxing 20
Possible Options
• QAD– Global Tax Management: manually configure tables
– Vertex and Sales and Use Tax Interface (SUTI)
• Quickbooks– Manually configure tax tables in QB
– Purchase Vertex license
– Purchase license from another vendor
• Ecommerce– Purchase additional Vertex license
– Purchase license from another vendor
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Making sales tax less taxing 21
Action Plan
• January – Saltillo and Quickbooks Implementation• February – Saltillo AvaTax Returns• April – Saltillo e-Commerce site implementation• May – Install QAD Connector• June/July – QAD configuration and testing• August 1 – QAD go-live• September – services website implementation• October – PRC AvaTax Returns
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Making sales tax less taxing
Saltillo Action Items
• Configured Saltillo company in Avatax Admin console– Set up Nexus
– Set up tax rules
– Set up automatic returns
• Quickbooks – implementation 1 week– Installed plug-in
• Web services – 1 day– Install api and modify custom shopping cart
Making sales tax less taxing
PRC Action Items
• QAD Implementation - 60 days– Installed api
– Configured tax class, tax usage, tax rate, tax zone, tax environment
– Cleaned up customer and item records
– Selected product codes
– Exemption overrides
– Special tax rates
• Website Services – 1 day– Install api and modify shopping cart
Making sales tax less taxing
AvaTax vs. Vertex – what did we gain?• 50% reduction in annual costs and fees• Licensing flexibility• Revenue savings used to expand services – automated
returns• Simple and easy installation• Reduced administration – no monthly updates• Large selection of product codes, taxability managed by
Avalara• Collect VAT tax for UK web services business
Making sales tax less taxing
Just like outsourcing payroll, companies that outsource sales tax benefit by:
Achieving compliance
Cutting costs
Increasing efficiencies
Focusing on growth
Making sales tax less taxing
How does it work?
QAD
Making sales tax less taxing
Sales tax end-to-end compliance
Making sales tax less taxing
Avalara’s capabilities continue to grow
Expanding IntegrationHundreds of integrations on all major commerce platforms
Improving TechnologyAdded support for Lat/Long, new REST API, UPC taxability, and high-availability cloud deployment
Avalara ServicesExpanded offering to customers with related applications
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