2. Making sales tax less taxing 1 CONFIDENTIAL & PROPRIETARY |

3. Making sales tax less taxing 2 CONFIDENTIAL & PROPRIETARY | Who is John Regan?

4. Making sales tax less taxing 3 CONFIDENTIAL & PROPRIETARY | Use Cool Tools: Be Like Bond Congratulations Avalara Special Agents!

5. Making sales tax less taxing 4 CONFIDENTIAL & PROPRIETARY | Sales tax is 47% of total state revenue! Source: US Census Bureau, 2012 Census of Governments: Finance – Survey of State Government Tax Collections at www.census.gov/govs/statetax Total State Government Tax Collections by Category Other taxes 3.9% Corporation net income taxes 5.3% Total license taxes 6.8% Total selective sales taxes 16.6% General sales and gross receipts taxes 30.5% Property taxes 1.6% Individual income taxes 35.3% Our Mission: What You Need to Know

6. Making sales tax less taxing 31 55 24 states have gone rogue, operating at deficit billion $ shortfall billion $ lost to uncollected internet sales The Villain: Rogue Government in Deficit

7. Making sales tax less taxing 6 CONFIDENTIAL & PROPRIETARY | The Villain Unleashes its Minions –California hires 100 auditors to go after online sales tax - Bloomberg BusinessWeek –Hard Times and Hired Guns in Local Tax Audits - Sutherland.com

8. Making sales tax less taxing 7 CONFIDENTIAL & PROPRIETARY | The Villain: Rogue Government in Deficit Changing the rules –Nexus is no longer based on a purely physical presence in a state –“Click-through” Nexus (Affiliate marketing - Amazon laws ) Changing the laws –Marketplace Fairness Act (internet sales) –Remote Transactions Parity Act (similar to MFA) –Online Sales Simplification Act (origin sourcing) –CA Senate Bill 8 (services)

9. Making sales tax less taxing 8 CONFIDENTIAL & PROPRIETARY | 100,000 + distinct taxability rules Exempt Products Exempt Organizations Tax Holidays Thousands of changes each year State-provided info often missing, misleading, or wrong Nexus rules Situs E-commerce rules Destination based Origin based Home Rule States Hybrid sourcing Zip codes don’t match tax jurisdictions Sales Tax is Hard.

10. Making sales tax less taxing 9 CONFIDENTIAL & PROPRIETARY | 52% of accounting professionals agree: completing a marathon would be easier to accomplish than understanding sales tax compliance laws. Sales Tax is VERY Hard! Source: Wakefield Research 2013

11. Making sales tax less taxing 10 CONFIDENTIAL & PROPRIETARY | Sales Tax is Misunderstood 7.85% 4.35% 6.85% 7.72% 7.35% 5.10% 80111 Taxes Represented: 2.9% Colorado State.25% Arapahoe County 1.0% Douglas County 3.5% Englewood City 3.0% Greenwood Village City 2.5% Centennial City 1.0% Regional Transport District.10% Football District.10% Science and Cultural District Determining sales tax rates by ZIP codes is inaccurate and risky.

12. Making sales tax less taxing Could you keep track of all this, manually? 12K jurisdictional boundaries 35K sales tax rates 30M product / service exemptions 750K buyer / seller exemptions Sales Tax is Complicated

13. Making sales tax less taxing Tree Trimming in California Taxable With Lights Exempt Labor Only Snow Removal in Midwest Taxable Ohio Exempt Illinois Candy Bars in Indiana Taxable Nestle Crunch Exempt Kit Kat, Twix Bagels New York Taxable Sliced Bagel Exempt Whole Bagel Takeout in Colorado Taxable Straws, Cup Lids Exempt Cups Donuts in Texas Taxable <5 Exempt >6 12 CONFIDENTIAL & PROPRIETARY | Sales Tax Often Makes No Sense

14. Making sales tax less taxing 13 CONFIDENTIAL & PROPRIETARY | Origin-based states for products (destination-based for services) Arizona, Illinois, Missouri, New Mexico, Ohio, Pennsylvania, Tennessee, Utah, Virginia Mixed source states California ̶ Counties are origin- based; Cities & STJs are destination-based ̶ Services are always destination-based Texas ̶ Cities and counties are origin-based based; STJs are destination-based ̶ Some services are destination-based Destination-based states All the Rest Sales Tax Rules Are Not Consistent

15. Making sales tax less taxing 14 CONFIDENTIAL & PROPRIETARY | Our Mission: Save Your Customers from MSTS Manual Sales Tax Syndrome

16. Making sales tax less taxing MSTS Symptoms: Apathy & Ignorance 15 CONFIDENTIAL & PROPRIETARY | The status quo: manual process “We’ve never been audited, so why worry?” “It’s too expensive”

17. Making sales tax less taxing Manual Compliance: Who Does the Work? 16 CONFIDENTIAL & PROPRIETARY | Your customer’s accountant does it manually, and he’s no expert!

18. Making sales tax less taxing Manual Compliance Isn’t Free 17 CONFIDENTIAL & PROPRIETARY | Source: Aberdeen Group, 2011 302 hours lost annually to manual workload. That’s two months of full- time work!

19. Making sales tax less taxing 18 CONFIDENTIAL & PROPRIETARY | Source: Wakefield Research, July 2013 50% of CFOs believe that an auditor would find a mistake! Manual Compliance Isn’t Accurate

20. Making sales tax less taxing Manual Compliance: High Risk, No Reward! 19 CONFIDENTIAL & PROPRIETARY | SALT GURU Worth the risk? –Do it right, no recognition. Do it wrong, get fined or worse! Worth the cost? –The average audit takes 3 months and costs $114K Worth the stress? –44% of accountants who have been through an audit say it’s more stressful than a divorce Source: Wakefield Research 2013

21. Making sales tax less taxing 20 CONFIDENTIAL & PROPRIETARY | What we believe: 1.Government complexity is ever-increasing 2.Technology eats bureaucracy 3.Business should be free to focus on core competencies Your Weapon Against MSTS: Avalara

22. Making sales tax less taxing 21 CONFIDENTIAL & PROPRIETARY | Market leader 1,000 employees and growing 410% growth last 4 years Over 18,000 customers, 20% of Fortune 500 Your Weapon Against MSTS: Avalara

23. Making sales tax less taxing 22 CONFIDENTIAL & PROPRIETARY | BILLIONS of tax calculations annually HUNDREDS OF MILLIONS of tax returns TENS OF MILLIONS of exemption certs HUNDREDS of connectors “We will one day be part of every transaction anywhere in the world” - Scott McFarlane, Avalara CEO Your Weapon Against MSTS: Avalara

24. Making sales tax less taxing Avalara: How it works 23 CONFIDENTIAL & PROPRIETARY | Tax Rates Jurisdictions Taxability Rules Address Validation ERP Connector

25. Making sales tax less taxing Who suffers the most from MSTS? 24 CONFIDENTIAL & PROPRIETARY | CEO High level of business complexity –Many SKUs, transactions or exempt sales –High-risk industry: Manufacturing, med device, food & bev, software/hardware, services, distribution –States with complicated sales tax rules: AK, AZ, CA, CO, KS, IL, LA, MN, NY, TN, TX, WA Growing companies –Acquisition or merger –New locations, products or services –Beginning to sell online

26. Making sales tax less taxing Who suffers the most from MSTS? 25 CONFIDENTIAL & PROPRIETARY | CEO Go-to-market strategies that create Nexus –Remote employees or field sales –Warehouses in multiple states –Affiliate marketing Timing –New CFO, Controller or Finance Manager –New ERP, ecommerce or accounting system –Pending or current audit

27. Making sales tax less taxing Referring Avalara: 3 simple questions 26 CONFIDENTIAL & PROPRIETARY | 1.Do you charge sales tax? 2.Do you outsource payroll? 3.Then why not outsource sales tax? –We are partnered with the market leader, Avalara. Their software is in the cloud, and we simply plug in. Could I have their Rep call you? This is the biggest no-brainer in the history of mankind!

28. Making sales tax less taxing Impress the COO! 27 CONFIDENTIAL & PROPRIETARY | Educate the CEO! Empower the CFO! WIIFM: Be a Consultative Solution Provider

29. Making sales tax less taxing 28 CONFIDENTIAL & PROPRIETARY | WIIFM: Rewards For a Job Well Done

30. Making sales tax less taxing Let’s Get Started 29 CONFIDENTIAL & PROPRIETARY | Your customers will buy our solution, now or later. Let’s make it now. I can register leads, to make sure you get credit. If a competitor signs up your prospect, they will get paid, not you. Customers? Prospects? Let’s strategize!

31. Making sales tax less taxing Mission Accomplished: Together We Will Save the World from MSTS! John Regan Strategic Alliance Manager Avalara 310-463-6796 john.regan@avalara.com 30 CONFIDENTIAL & PROPRIETARY |