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Back to Basics with Avalara: Everything Businesses Need to Know about Sales Tax Compliance – Futurum Tech Webcast Interview Series
by Shelly Kramer | December 7, 2021

In this episode of the Futurum Tech Webcast, Interview Series, I’m joined by Maria Tringali, Senior Solutions Consultant at Avalara for a conversation about every business’ favorite subject: sales tax compliance!

Understanding the many nuances of sales tax compliance is hard; staying compliant with ever-changing rules can be even harder. Trust us, you’re not alone if you feel confused and overwhelmed by the mere mention of sales tax and all that it involves.

We talk economic nexus. Exemption certificates. Sourcing rules. Business license management. If hearing those terms made your head spin, then this conversation is truly for you.

Few U.S. businesses who collect and remit sales tax understand all the rules or how to comply with them. This has been further exacerbated by the pandemic with many new or changed rules. So, what do businesses need to know to make sure they get sales tax compliance right? That’s exactly what Maria and I discussed today. Here are the highlights of our discussion:

  • Tax legislation has changed over the past few years and Maria shared some highlights of key things that companies should be aware of as it relates to sales tax compliance.
  • Business face big challenges today related to sales tax compliance, and we explored the most significant of those challenges.
  • Maria shared advice on how businesses can learn about how the new laws affect them and ensure they are compliant.
  • Why automate sales tax compliance? The better question is whyever would you NOT want to automate it! Maria shared thoughts on that, as well as why SAP users should automate their compliance now.
  • We explored Avalara’s end-to-end solution, and what that means in terms of product offerings.
  • What happens if businesses don’t comply with state laws around sales tax compliance? Well, it’s not pretty, but very important to know.
  • Are there specific kinds of companies or industries that can benefit most from using an end-to-end solution like Avalara for sales tax compliance — you might be surprised to learn the answer.

Finally, we wrapped our conversation with a look at 2022 and what we can expect moving into the new year. One thing we can be certain of, change is a given. And what I learned from this fascinating dive into everything businesses need to know about sales tax compliance is that you should run, not walk, and explore a risk assessment from Avalara and get an objective look at the current state of affairs as it relates to risk in your business. You might be surprised by what you find, and I’m pretty sure you’ll walk away from that infinitely more prepared to make a plan to integrate technology into your sales tax compliance operations moving forward. You can find more information on Avalara’s solution by visiting the SAP Store.

Be sure and make time to connect with Maria on LinkedIn — she will always be happy to answer your questions and help you find the right solutions for you and your business.

You can watch my interview with Maria here (and subscribe to our YouTube channel while you’re there):

Or grab the audio here by way of your favorite streaming channel:

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Disclaimer: The Futurum Tech Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Shelly Kramer: Hello, and welcome to this episode of the Futurum Tech Webcast. I’m your host, Shelly Kramer. And I’m joined today by

Maria Tringali. Who’s a senior solution’s consultant for Avalara, and we are going to talk today about everybody’s favorite topic. Taxes. And what we’re going to cover is everything businesses need to know about sales tax. I don’t know about you, but this is not something that’s my favorite thing to think about. So I need all the help I can get. So just to set the stage here, understanding sales tax is hard. Staying compliant is sometimes even harder, especially when rules change on a regular basis. And if you feel confused or overwhelmed by the mere mention of sales tax, trust me, you are not alone. I am at the very top of that list. We are going to talk about things like economic nexus, exemption certificate, sourcing rules, business license management.

If hearing those terms, make your head spin, then this conversation is truly for you. So, what we know is that few US businesses who collect and remit sales tax, understand all the rules or how to comply with them. This has been further exacerbated by a global pandemic. And you know, there’s also been many new or changed rules over the course of the last couple of years. So what do you need to know to get it right? That’s exactly what Maria and I are going to be talking about today. Maria, welcome to the show. You are everybody’s savior today. Thanks Shelly. Delighted to be here.

Shelly Kramer: Absolutely. Well, before we dive into sales tax, I want to know your backstory. Tell us a little bit about your career path and what you got you, to where you are today?

Maria Tringali: Sure. I’d be happy to. It’s sort of funny. Maybe like some of us is obscure path to where I am today, but I spent my first life and my first career in the hospitality business. So I was in the hotel sales marketing for many years, and then, was actually a customer of mine that encouraged me to look into software, living in Seattle. We have a lot of technology and he said, “You’re really sharp. I think you’d be very successful in the technology business.” And so he actually introduced me to a friend that needed some help with a project. And I ended up getting hired by them as a salesperson. So I migrated over. Very lucky, from the hospitality business into software. And then I was there for about five years and then I migrated over to Avalara.

So I’ve been with Avalara in the tax compliance business for seven years now. And I’ve migrated up to, I don’t know, not migrated, but I’ve become one of the companies specialists on selling exempt. And so people who are in the B2B business and don’t think they have a lot of sales tax compliance or risk, and helping them understand, the actual, what compliance is. It’s not just tax rates.

Shelly Kramer: Very cool. You know, I have 15 year old twin daughters who are sophomores in high school. And one of the conversations that I have with them on the regular, is to try and think about, when you think about a career path, what you want to think about is something that everybody always needs. Right?

Maria Tringali: Right.

Shelly Kramer: And what you do working with a company like Avalara, everybody always needs this. It’s not temporary. It’s not impacted by a global pandemic. You know, the business doesn’t ever go away. The needs don’t ever go away. So it, I love the fact that your career path kind of lead you down here. Because it makes perfect sense. Right?

Maria Tringali: It does. It’s also always changing.

Shelly Kramer: Yeah.

Maria Tringali: So it’s one of the things I love about this job, is there’s always something new to learn. It never gets sold.

Shelly Kramer: Right.

Maria Tringali: Regulations are always changing.

Shelly Kramer: Right.

Maria Tringali: New industries are popping up. It’s fascinating. Yeah.

Shelly Kramer: Well right. I remember having a conversation with our accountant in the last couple of years. And you know, when the tax changes went into effect in 2017, it was just like, oh my gosh, sweeping change. And they were busier than they’d ever been. And now we have some additional changes or things kicked in, or whatever. So you’re right. If you love change and you love kind of diving in and sussing out all the details associated with change, this is a perfect spot, right?

Maria Tringali: Yeah.

Shelly Kramer: So tell us a little bit about Avalara, if you would.

Maria Tringali: Sure. So Avalara was founded in 2004, and was founded by a gentleman who thought that tax compliance should be easier for small to medium size businesses. Why do the enterprise businesses get, have all the money, and they can create some custom platforms and some custom algorithms or whatever they were doing? Why can’t we make this easier for smaller businesses?

Shelly Kramer: Right.

Maria Tringali: So he came up with a concept of keeping all the information in the cloud, and passing that down to a system and doing a calculation. So he really was, early adapter of cloud based technology and building partnerships with platforms. So fast forward or to today, we have over a 1000 of these partnerships. So our mantra is, in these prebuilt integrations, with, wherever you create an invoice, we integrate with you and help you create tax or do a tax determination, at the time of sale. And we’ve also grown into global markets and other things such as tax research, business licenses.

Shelly Kramer: Right.

Maria Tringali: Exemption certificates, all sorts of things that have to do with compliance now. So really an end to end compliance solution provider globally, now.

Shelly Kramer: That’s awesome. Everything you need in one place. Minimize headaches.

Maria Tringali: Yeah.

Shelly Kramer: Stress, all of that. So we talked about this just a minute ago. We touched on it, but tax legislation has changed a lot over the past few years. I know you probably have some highlights that you can give us, that companies should be aware of. So let’s hear it.

Maria Tringali: Yeah. There have been some changes. And you may have heard of these Shelly, and our audience may have heard of the economic nexus laws that were now passed, the Supreme Court made the decision…

Shelly Kramer: Right.

Maria Tringali: …in 2018, that states can now require businesses to remit tax to them. If you, just by shipping in their products, into their state. You don’t have to have a physical presence any longer, so that decision went all the way to the Supreme Court. And so now all of our states, all the 46 jurisdictions that have sales tax, do have economic nexus laws. And I want to say laws, Shelly, I’ll say it probably six times. So what’s happened is, they got totted originally as internet laws.

Shelly Kramer: Right.

Maria Tringali: And so for some reason, a lot of people felt that, well, if I don’t have a website or I’m not selling on the website, or I’m not shipping anything via my website, the laws don’t apply to me.

And that’s actually not correct. Think about it this way, the state, if you’re sending something into their state, no matter how it gets there, whether you deliver it on a truck or yourself, or it doesn’t matter how I purchased it, it matters where that product is getting used. And the state wants a cut of that revenue. So we have a lot of businesses that are trying to catch up on, understand those laws. But that was a really big change. And I think maybe got sort of mismarketed out there initially, that they were just internet laws. So…

Shelly Kramer: Yeah, that is a ginormous change. Anything else we need to be aware of?

Maria Tringali: Well, that’s really the biggest change.

Shelly Kramer: The biggest one?

Maria Tringali: And I would say that states continually change too. So now that those laws are out there and they made a decision a couple years ago on what they thought the thresholds might be, they continue to change. So businesses have to continue to watch out and see what has changed, and make sure they stay compliant. And the other thing businesses are changing is, you probably know this if you’re in business, but anything that’s intangible, nobody agrees on how to tax it.

Shelly Kramer: Right.

Maria Tringali: So if you sell services or you sell downloadable software, anything you can’t touch, nobody really agrees on how to tax it. So states are continually changing how they want you to apply taxability to different products and services, to generate more revenue. So that’s another thing you have to keep up on, is taxability.

Shelly Kramer: Yeah, absolutely. So you’ve touched on a couple of these things, but my next question is, really, what are some of the biggest challenges that business face today, as it relates to tax compliance? I mean-

Maria Tringali: Yeah.

Shelly Kramer: You don’t know, what you don’t know. Of course.

Maria Tringali: You don’t know, what you don’t know. Exactly. One of my dear friends is a, runs a manufacturing firm and I always ask him, well, how can we be more helpful to manufacturers? And he’s like, we just don’t know, what we don’t know. So you can tell us, start from the basics, right?

Shelly Kramer: That’s my favorite dadism. We don’t know, what we don’t know, until we know.

Maria Tringali: And this guy is such a dad, so that’s actually perfect. Yes. Perfect. So, yeah, it’s true. So we, why I would say what businesses don’t know, is how those laws affected their business. That is the biggest thing. We start every conversation at Avalara with, do you understand how those new laws affect your business and are you compliant? There’s that. And then there’s also, we did already touch on this, but there’s also keeping up. How is a business, how is a small business supposed to keep up with all these changing things and make sure they stay compliant? So I think the biggest challenge is just knowing. Just knowing or partnering, knowing who to partner with and who to get help from, and also take the responsibility, these are also laws. Some businesses like to just kind of stick their head in the sand, right?

And we see a lot of businesses [crosstalk] that aren’t compliant. And then when you get so far behind with the state, you can end up owing 1,000,000’s of dollars, and you have to be really, you have to make sure you’re a good steward of your business. So…

Shelly Kramer: Yeah. Sticking head in sand, is rarely the best strategy. Especially when it relates to anything having to do with taxes.

Maria Tringali: Right.

Shelly Kramer: Tax compliance and all that, right? So, how do businesses, what do businesses do, to try to learn about new tax laws or new laws that affect them, and how they can stay compliant? I mean, to me, I mean, I’m a business owner. I’ve been a business owner for 25 years. Today, I own a family of companies. My most hated task, any day of the week, any week of the year, has anything to do with taxes. Right? I don’t want to do it. I don’t want to mess with it. I don’t want to think about it. I don’t want to do the research. I don’t want to.

Maria Tringali: Mm-hmm.

Shelly Kramer: So what do I do? What do businesses do to learn about, or to try to stay on top of all this? I have a feeling, I know what the answer is, but…

Maria Tringali: It is, yeah. It is partner with somebody. We don’t expect you, I don’t even expect the teams that I work with and train, to remember everything. I definitely don’t.

Shelly Kramer: Yeah.

Maria Tringali: Partner with people who know what they’re doing. And by that, I mean, specifically partner with a business like Avalara that can help you. We can help you understand your compliance requirements as well as help you with automation, if that’s what’s needed. You can also partner with a CPA practice, but make, promise me it’s a CPA that has a SALT practice within a state and local tax practice.

Shelly Kramer: Right.

Maria Tringali: Generally your local CPA, as you probably know Shelly, your local CPA is not going to know anything about tax compliance in Texas.

Shelly Kramer: Right.

Maria Tringali: Or outside of your state.

Shelly Kramer: Right.

Maria Tringali: They’re just not going, they just don’t have that expertise. So if you do partner with someone, and we do this thing called, in the industry, we do this thing called a nexus study or a sales tax risk assessment.

So we can help you understand pretty quickly, where the laws might have affect you, and what any back liability you might have. And then what do we do, moving forward? You can create a plan, whether that’s a phased approach, or you only wanted part of it, or whatever that is. Consultants in our team can help you decide what is the best path for your company to get current? That’s really the biggest thing I could say is, you don’t understand how those laws have affected you.

Shelly Kramer: Right.

Maria Tringali: Please promise me, you’ll start there. Because that’s really the most important. You can read up on it.

Shelly Kramer: Right.

Maria Tringali: There’s lots of resources. Avalara has amazing free resources. There’s lots of resources you can read up on. But at the end of the day, every one of our 46 tax jurisdictions, has different laws. And that’s really hard to do independently.

Shelly Kramer: Right.

Maria Tringali: Shelly, would you do that? Look at the law for every state and try to apply it for your business practice. And you have multiple entities you mentioned, right? So that’s just overwhelming for you to sit down and do. Yeah.

Shelly Kramer: Yeah. I want to jump off of bridge.

Maria Tringali: Yeah. It’s-

Shelly Kramer: Just thinking about it.

Maria Tringali: Yeah.

Shelly Kramer: But what I love, is that, and I want to be sure that our listeners and viewers get this as a takeaway. You know, the reality of it is you don’t have to jump in with both feet.

Maria Tringali: Right.

Shelly Kramer: What you can do, it looks like, it sounds like, is get started by simply doing a risk assessment.

Maria Tringali: Mm-hmm (affirmative).

Shelly Kramer: You know, and again, we don’t know, what we don’t know, until we know. So looking at doing this assessment, it’s a way to get started, to understand the landscape of what it is we’re looking at. To learn about compliance issues or other risks, that you may or may not have ever even realized were a thing. And then make a decision on what to do, where to go from there. And…

Maria Tringali: Absolutely. Those risk assessments, I always tell our customers, are, they’re an independent report from which you can make educated business decisions?

Shelly Kramer: Yeah.

Maria Tringali: Without that information, you’re just guessing.

Shelly Kramer: Yeah, absolutely.

Maria Tringali: So do that. Get that independent study, get that assessment documented, and understand what your liability is. Then step two is, what’s the solution?

Shelly Kramer: Right. That makes perfect sense. Well, I will say that I remember, years ago, I remember, I used to, I’ve never done my taxes myself, but a lot of, years and years, like 20 years ago, I was doing, trying to keep up with my own bookkeeping and everything else. I’ve always, I had a relatively small company back then. And I remember when I finally hired somebody and handed that over, and I remember thinking, oh my gosh, why did I take so long to do this? And it was, something it’s a matter of trust, right? And finding the right partner and everything else, but it’s just like, oh my gosh, this changed everything about my life. It changed everything about my business stress and frustration. And, I mean, when you’re in your 30’s and running your first business, there’s lessons to learn along the way, right?

But the reality of it is, as you know, as a 20 plus year professional, what I’ve learned is that, I don’t want to do the things, I don’t want to be my own lawyer. I don’t want to be my own accountant.

Maria Tringali: Right.

Shelly Kramer: I don’t want to be my risk assessment professional.

Maria Tringali: Right.

Shelly Kramer: I’m not good at that. What I want to do all day long, are the things that I’m really good at, and that people hire me to do. And so I think that understanding, and we have this conversation here at Futurum a lot, as it relates to really anything today. The path forward, the smart path forward for most businesses, regardless of what it is you’re thinking about doing, is smart, strategic partnerships. Business is complicated. And the idea that we should somehow be able to do, have the knowledge base and the capability and the resources to do everything ourselves, is the most outdated way of thinking, period. Whether you’re a small to midsize business, or of course, if you’re an enterprise business, that’s impossible. So I think, part of your comment in terms of the value proposition that Avalara brings to the fore, is that you have the ability to partner with your clients and really bring that level of expertise that they don’t have, and reduce their business worries and workload, and frustrations. And to me, that sounds like a welcome offering.

Maria Tringali: For sure. I have seen in many businesses that I’ve talked to, when they start to look at automation, and doing this risk assessment, their instant reaction sometimes to say, well, I can just hire someone. Well, actually you can’t Shelly. That person doesn’t exist.

Shelly Kramer: It does not.

Maria Tringali: A human doesn’t replace automation. And another thing about tax compliance is, it touches so many people in your business.

Shelly Kramer: Right.

Maria Tringali: One human is not doing it all. There are probably four or five people in anybody’s organization that touch tax compliance. There’s filing, there’s collecting exemption certificates. There’s putting tax rates in your system. There’s use tax there’s all. And it’s touched by different people. So the answer is not hire more people.

Shelly Kramer: It is not.

Maria Tringali: It’s, that’s not the answer. The answer is leverage partners and automation.

Shelly Kramer: Yeah.

Maria Tringali: That have information centralized. That you can trust, right?

Shelly Kramer: Yeah.

Maria Tringali: The person, there’s always human error and that person doesn’t exist. So I, it’s very, very funny that people equate a cost of automation with a person when it’s not really apples to apples.

Shelly Kramer: Right. Well, and what we know is that the reality today, is that for most businesses, there’s a perfect marriage of technology, people and processes. And it’s not like, technology alone is never the answer. And people alone today are not the answer. But it really is this magic combination of the right people, the right processes, relying on the right technology solutions. And that’s the difference maker. And by the way, that formula is true, regardless of the size of your organization.

Maria Tringali: I agree.

Shelly Kramer: So…

Maria Tringali: I totally agree. Yeah. Yeah. Some people say, oh, we’re too small for tax audit.

Shelly Kramer: No, you’re not.

Maria Tringali: No, you’re not.

Shelly Kramer: No, you’re not.

Maria Tringali: You answered before I did. No, you’re not. I mean, like you said, our founders, Scott created the company because small and medium size businesses need to have an easy way to do this. And the other thing I want to add is, states do not make it easy for you-

Shelly Kramer: No.

Maria Tringali: As business owner to do your job. When they implement a new tax or a new process, they don’t care how hard it is for you to remit it to them. They just want their money. They do not care…

Shelly Kramer: Yeah. Yeah.

Maria Tringali: …how many hoops you have to jump through or employees, you have to hire whatever have to put in place. They don’t care.

Shelly Kramer: They don’t care. They just want their money. So let’s talk about automating tax compliance. That’s why SAP users should automate their compliance right now?

Maria Tringali: Yeah. So SAP user send heavily manufacture and distribution.

Shelly Kramer: Right.

Maria Tringali: Larger business, a lot of tax and clients, a lot of sales, you know what that means? A lot of risk.

Shelly Kramer: Right?

Maria Tringali: So one thing that I always ask businesses initially, is people come to us and they just want tax rates. They just want some rates to put into their ERP to put in their SAP system. Rates is not the end all, be all. It’s what I call, selling the sexy part of sales tax, because it’s what we see on our receipts as consumers.

Shelly Kramer: Right.

Maria Tringali: Tax is a tax rate. There’s so much more underneath that iceberg of tax compliance.

Shelly Kramer: Right.

Maria Tringali: And a business that’s running SAP, as their ERP, is likely a sizeable, complex business. That’s where SAP specializes.

Shelly Kramer: Sure.

Maria Tringali: And they have a lot of compliance that they need to be aware of.

And so automation really comes into play from calculating those tax rates that you need, to helping you do a way better job of collecting, managing those exemption certificates. Making sure they’re accurate to automated returns filing, to your licenses and to tax research and all kinds of things. So they, it tends to be a complex business with a lot of people touching tax compliance. And exactly what you just said, the automation is going to help everybody do their jobs.

Shelly Kramer: Right.

Maria Tringali: It’s not going to replace any people. You still have people, you still have the responsibility of tax compliance, but it’s really important that you step into the automation age, and out of these manual processes.

Shelly Kramer: Yeah.

Maria Tringali: I deal with that exemption certificates a lot. And they’re one of the few things out there that are still on paper. Why on earth are we still collecting these things on paper?

Why? I mean, it’s like, we don’t understand. They need to be digital and digitally managed, and digitally validated these days. We, it’s 2022 almost, right? So we need to get into the current century and do more automation. And back to what you said earlier, once you grabbed your, or signed up your accountant, every customer that ends, that uses automation, whether it’s Avalara or anybody else, it just falls in love with it.

Shelly Kramer: Yeah.

Maria Tringali: They can’t believe what they were doing manually before, that can be done by software and automated, now. They just can’t believe it. They’re, ask anyone.

Shelly Kramer: Well…

Maria Tringali: And customers who use Avalara, they just, they would never get rid of it.

Shelly Kramer: Yeah.

Maria Tringali: I kind of liken it to Shelly? You won’t give your smartphone back, right?

Shelly Kramer: Never.

Maria Tringali: Right.

Shelly Kramer: But the other thing I think that’s so important here, is that, we are in a situation where, I don’t know any business, that’s not focused on talent recruitment and talent retention.

Maria Tringali: Mm-hmm (affirmative).

Shelly Kramer: And jobs are a dime dozen out there. And people are very particular about what they want to do, what they want to spend their time doing, what their career trajectory path is and all that sort of thing. And so when you can work with, integrate technology solutions that help make, what can only be called somewhat onerous jobs…

Maria Tringali: Right.

Shelly Kramer: …more enjoyable, more expeditious. You know, when you can take that nasty stuff off of somebody’s plate and use automation to be able to do what no human can do.

Maria Tringali: Right.

Shelly Kramer: And at the same rate that automation can, all of a sudden, not only are you getting better business results, you’re creating, better work environment, better jobs for people, and allowing them to do the things that require a higher level of critical thinking. That are more interesting, and that really allow them to blossom and grow in their jobs. And I just don’t think that, that can in any way be overlooked today, because of the fact that we are in a situation where talent is really tough to find. And it’s really tough to keep. So when you can think about it from a cultural standpoint too, I think it makes a big difference.

Maria Tringali: Yeah. And I, and your business, do you outsource payroll? Do you use ADP or any of the other payroll service?

Shelly Kramer: We do. Yes.

Maria Tringali: Same concept. Does anybody do their payroll themselves anymore? It’s too risky. Right? What’s the last thing you want to do is mispay an employee, right?

Shelly Kramer: Oh my gosh. Yeah, absolutely.

Maria Tringali: So tax compliance is down, is there now, you have to.

Shelly Kramer: Yeah.

Maria Tringali: You simply have to outsource.

Shelly Kramer: Yeah.

Maria Tringali: Especially if you’re an SAP user. You just simply have to.

Shelly Kramer: Yeah.

Maria Tringali: It’s too risky not to. And what you said, your employees, they want to be happy. They don’t need to be running these reports. I had this call the other day with this lady that, I think she was almost in tears, because she couldn’t get the reports out of her ERP in a format to give her the information that the state was requiring. And I was like, that’s where automation comes in.

Shelly Kramer: Yeah.

Maria Tringali: It’s impossible to do those.

Shelly Kramer: Yeah.

Maria Tringali: She’s trying to massage data in Excel spreadsheets. And that’s not something that employees enjoy doing. Right?

Shelly Kramer: No.

Maria Tringali: It’s tedious and time consuming and doesn’t produce any benefits, especially when you’re just paying the government. Right?

Shelly Kramer: Right. Right.

Maria Tringali: It’s not right. It’s a pass through. Sales tax is a pass through.

Shelly Kramer: Absolutely. Absolutely. So let’s talk about Avalara, just a little bit now. So it’s an end to end solution, but what does that mean in terms of product offerings?

Maria Tringali: Yeah. So that’s a good question. So there’s a process to sales. You sign up a customer. If that customer wants to be exempt, then you collect an exemption certificate from them. Then when you get to invoicing, you calculate tax on that invoice, and then you have to file and remit to the government, report in, and remit to the government. And then there’s all sorts of other things in between there. There might be some tax research that you need to understand how things are taxable. You might have some business licenses, so basically anything you can consider under compliance, Avalara can automate it or assist with it. As I said, big, global company, publicly held company now, and we keep adding resources to help our customers. So whatever you consider compliance in your business, Avalara can likely help with that. And it’s important to tie those things together and not segregate them.

Shelly Kramer: Right.

Maria Tringali: You don’t have one platform collecting your certificates and another type of engine that’s calculating tax or some tax rates, and then someone else over here doing returns. So the end to end solution ties the process together. As I mentioned earlier, that the tax compliance, such as a lot of people in an organization.

Shelly Kramer: Right.

Maria Tringali: So you want to also tie that together with the automation. So that’s really what that means from the beginning of when you sign up a customer to the end, when you invoice them and remit to the government. All that string of tax compliance process needs to be connected.

Shelly Kramer: No silos.

Maria Tringali: No, it doesn’t work that way. And some people try to do that and they ultimately come back to Avalara.

Shelly Kramer: Yeah.

Maria Tringali: It happens a lot.

Shelly Kramer: Yeah.

Maria Tringali: Where they choose one other system to do this, another system to do that. They ultimately come back.

Shelly Kramer: Yeah.

Maria Tringali: Our sales people actually know. They kind of giggle and they put a customer who’s done that, on a [tickler] six months from now, because they know that customer’s going to be frustrated, when they try to silo.

Shelly Kramer: Yeah.

Maria Tringali: And I just had someone the other day, I’m not kidding you, the other day on a call said, “I wish I’d listened to you guys in the first place.”

Not making that one up.

Shelly Kramer: I’ve had some of those before. I understand completely. Yeah.

Maria Tringali: Yeah. It’s hard. This is hard Shelly. This is a hard step. It’s not easy.

Shelly Kramer: It’s, yeah. It’s so hard and it doesn’t have to be. So we talked about compliance, just let’s touch briefly on what, some of the things that can happen if businesses don’t comply? I mean, again, you made clear early in our conversation, this isn’t suggestion, this is tax laws.

Maria Tringali: These are laws. Yeah.

Shelly Kramer: These are laws.

Maria Tringali: And you need to be a good steward of your business and make sure you obey the laws, kind of like speeding or anything else. Right? Getting your car license, and your vehicle’s license, like anything. Funny that you asked that. Just asked that question about 10 minutes before a call by one of our newer employees, is what does happen? She said, “I was afraid to ask the question on group call because I thought it was a dumb question.” It is not a dumb question at all.

Shelly Kramer: It’s not.

Maria Tringali: To ask what happen if they don’t do all these things we tell them to do. It’s a great question. So couple of answers, first of all, across the country, about 40, 44%, 46%, I can’t remember the current number, of a state’s revenue, comes from sales tax revenue.

So states are very aware that sales tax is important to them. And that’s where they get money from their constituents to build roads, to do development, to take care of homeless, to the county hospital, right? All of that revenue are, that’s our tax dollars. I live in Washington. We don’t have state income tax. So we’re very aware that everything gets taxed. Our, we read 54% of our state’s revenue in Washington, comes from sales tax.

Shelly Kramer: Yeah.

Maria Tringali: And there are constant initiatives on the ballot to tax new items, tax different grocery items, to get more money into the state. Because we don’t have state income tax.

Shelly Kramer: Right.

Maria Tringali: So the states are very aware of the value of sales tax and these economic nexus laws. As we said, changed the game, because now, more out of state businesses owe me if I’m Washington, owe me income because they’re selling goods into my state.

Shelly Kramer: Right.

Maria Tringali: So now, I can go audit a business in Texas, that’s selling stuff into Washington.

Shelly Kramer: Yeah.

Maria Tringali: So I’m still going to audit my local constituents, but those are my constituents. I have more fun auditing the people from out of state, and states are very aware of that. So you can get audited. And if you get audited once, it typically checks off a trigger of audits.

Shelly Kramer: Right.

Maria Tringali: A chain of audits, because they talk or because it exposed another business or another process, is you’re kind of downhill from there. If you get-

Shelly Kramer: Yeah.

Maria Tringali: …audited by a state. And if you do get audited, I work with a lot of our accounting partners, they will always tell you consistently, whatever taxes you didn’t pay them, you can double that, in fines and penalties. And states have the right to audit you back up to 10 years. So that’s a lot of audit Shelly.

Can you imagine if you were audited and not doing your tax compliance right? And they went back 10 years to see what you did 10 years ago. And they don’t look at every transaction. They just take an average.

Shelly Kramer: Right.

Maria Tringali: They’re like, oh, it’s like you have about a 20, 30% error rate. All right. 20% of your income, here’s the tax you owe me. Our tax rate is 10.7%, right? Or 10.5, or whatever it is.

Shelly Kramer: Yeah.

Maria Tringali: And they just do that math and go, that’s what you owe. And so it’s risky. It can put businesses out of business. And they’re, they just really back to stick your head in the sand. And people are like, oh, we’ll never get audited. We’re a little manufacturer in the Northwest corner of Minnesota. You know, they’re never going to find us. Yes they will.

Shelly Kramer: Yeah they will.

Maria Tringali: Stories, I hear them every day. Believe me, they will.

Shelly Kramer: Well, and it’s, it’s easier than ever. I mean…

Maria Tringali: Yes.

Shelly Kramer: For them to find, you know what [crosstalk] I’m saying? I mean, with technology, and I think it may be, 20 years ago it might have been easier to fly under the radar, but it’s, it’s not really easy, or sometimes possible now. And why would you want to try? But the other thing is, is that, what business owners need to realize is, the onus is on you.

Maria Tringali: Yes.

Shelly Kramer: So if the state does that audit and says, oh, you owe us 20%, they send you a bill. Okay.

Maria Tringali: Yeah.

Shelly Kramer: They don’t say, let’s talk about it. No, they send you a bill.

Maria Tringali: They do not. Yeah.

Shelly Kramer: They send you a bill and they say, pay this by such and such a time, or other bad things are going to happen.

Maria Tringali: Yep.

Shelly Kramer: And if you think that this is incorrect and, you need to hire a tax attorney. You need to, and they’re not interested in sitting around waiting for their money.

Maria Tringali: Mm-hmm (affirmative).

Shelly Kramer: So it’s like, so not only is there the risk of this happening and getting audited, and getting a bill that’s, kind of an estimated bill, it’s what you have to do from there as a business owner to kind of fight through this or figure it out or anything else. And so it’s like, that’s a headache that nobody wants.

Maria Tringali: Yeah.

Shelly Kramer: So if you haven’t before thought about compliance and how important it is, and what the risk that non-compliance presents to your business, please let that be the key takeaway from this conversation. That is not something you want to roll the dice on.

Maria Tringali: It is not. Yeah. It’s, it’s not fun. I have some businesses tell me, I’ve probably heard it all now. But some businesses tell me that, oh, well, we’ve been audited. And we only ended up owing like $2,000 to the state, but they forget about how much it costs them to go through that audit and fight it.

Shelly Kramer: Right.

Maria Tringali: They have to go hire a tax attorney. They have to dig through their files for exemption and certificates.

Shelly Kramer: Right.

Maria Tringali: How many people?

Shelly Kramer: Right.

Maria Tringali: Man hours? What was the cost to get that price down to $2,000 or whatever it was.

Shelly Kramer: Yeah.

Maria Tringali: They forget that. And that’s really important.

Shelly Kramer: Absolutely, absolutely. Listen. You’re preaching to the choir here because I want all the help I can get. I want all the help I can get. I don’t want to mess up. I don’t want to owe any government anywhere, money.

Maria Tringali: Yeah.

Shelly Kramer: I just want to be able to take a deep breath and think this is taken care of. So…

Maria Tringali: That also, just one more little thing on that, shelly. A lot of auditors will ask you for a list of your customers.

Shelly Kramer: Yeah.

Maria Tringali: You don’t want to expose your customers.

Shelly Kramer: They will.

Maria Tringali: California, especially, they’ll ask you for a list of your customers that you sold say, exempt two, they’ll ask you for that.

Shelly Kramer: Right.

Maria Tringali: And what are you going to do when the state asks you for that? You have to expose your customers. No one wants to do that.

Shelly Kramer: Right. No.

Maria Tringali: You want to be proactive, do not be, do not let yourself get in the reactive position, be proactive.

Shelly Kramer: No, this is not a good time to be in the reactive situation. So let’s talk just minute about, are there certain kinds of companies or industries that can benefit most from using this kind of software?

Maria Tringali: Well, any business, as you said, from the get go Shelly.

Shelly Kramer: Yeah.

Maria Tringali: Has tax compliance of some sort.

Shelly Kramer: Yeah.

Maria Tringali: Every, no matter if I just sell widgets on the corner, I have a coffee shop or I have a multi country, global business. Everybody has some sort of tax compliance. So I would say the most complex, tend to be when you get into having exempt sales and customers that want to be exempt from sales tax, because it gets easy to fall into the trap of, well, we don’t charge tax, so we don’t have to worry about it.

Shelly Kramer: Right.

Maria Tringali: That’s not true. Any state you’re registered in or you’re legally required to register in, you owe that state the tax, sans, those exemption certificates. So the onus is on you. You already pointed that out.

Shelly Kramer: Yeah.

Maria Tringali: The onus is on you to do that. So I don’t think there’s any type of business that should ignore tax compliance. I also think there’s a solution for any type of business. As I said earlier, some people think they’re too small for tax compliance, but you’re not. And there are, there’s automation for QuickBooks.

Shelly Kramer: Right.

Maria Tringali: There’s automation for shopping carts, for little tiny shopping carts. For Magento, there’s automation and help for any size business. So whatever your compliance responsibilities are, there’s a solution for you that’s appropriate.

Shelly Kramer: Yeah.

Maria Tringali: That will significantly reduce your risk and keep you from having to hire an expensive tax attorney.

Shelly Kramer: Well, and I think too, a lot of times when we are hearing about or evaluating some kind of solution, some kind of technology solution that, I think sometimes we might have the tendency to go, oh, that sounds expensive.

Maria Tringali: Mm-hmm (affirmative).

Shelly Kramer: Avalara, that’s a big company.

Maria Tringali: Yep.

Shelly Kramer: I don’t know. You know, and, but as you said, it, you kind of have to understand, that the kinds of things that you are small company might potentially need, are different from my bigger company and what we might need. And that again is different from what an enterprise might need. But I think that the needs across the board are the same. The costs associated with filling some of those needs are completely different, based upon your situation. And there’s not just a one size fits all, one price fits all solution. So my point is for our listeners, don’t go down the path of convincing yourself, well, we’re not big enough to need this.

Maria Tringali: Right.

Shelly Kramer: Because chances are, you are.

Maria Tringali: Yeah. And it scales, right? You can start at very small. As I said, you can integrate with QuickBooks.

Shelly Kramer: Yeah.

Maria Tringali: It scales, from very inexpensive for a simple business. It just depends on the complexity of your compliance and that equates to your risk. There’s always a return on investment. And again, people can’t do this and people are expensive too. That’s crazy. Like, I don’t know why we think we would prefer people over technology. People are expensive. You know that, you’ve got employees, right? Invest in them, provide benefits.

Shelly Kramer: Yeah.

Maria Tringali: It’s crazy. But yes, any small, we have, Avalara has over 30,000 customers at a certain price level and above, but we have over a 100,000 customers, if you start from the very, very small businesses that have some online buy.

Shelly Kramer: Yeah.

Maria Tringali: 400,000 businesses. There’s no reason not to do it. It’s very affordable. Automation is very affordable. And remember it’s not just tax calculation.

Shelly Kramer: Right.

Maria Tringali: There is all those other things.

Shelly Kramer: Absolutely, really important. So we are about ready to wrap our conversation. But before we do that, tell us what do you think, what are you thinking about? What can we expect moving into 2022?

Maria Tringali: Well, I’ve covered it a little bit already. I think we can continue to expect the laws to change, the individual states to tweak what they’re doing, and tweak their requirements.

Shelly Kramer: Right.

Maria Tringali: We can expect taxability to change. As I mentioned, states want more tax revenue. COVID did not help that.

Shelly Kramer: Right.

Maria Tringali: So they want more tax revenue. So they’re thinking of more things that they can tax. So changes are always, in fact, we do public webinars at Avalara and our tax changes webinars are always our most popular.

Shelly Kramer: Yeah.

Maria Tringali: Because people want to know what’s going on. So always look at that. And I think you can also see that businesses are looking more at compliance and automation in different ways. There’s that, the world is now understanding that compliance is not just a sales tax rate.

So there are a lot of things under the compliance umbrella, you’re going to see more and more tools out there to help your business than ever before.

We’ve already expanded from just tax rates to filing returns, to exemption certificates, not a, business licenses, right? You’ve seen these little things. And I also think that the global world is getting smaller, as we all know.

Shelly Kramer: It is.

Maria Tringali: So you going to see more ease of automation on a global scale as well. And can we calculate back? We help you get registered in other countries, and you need to be aware of your global exposure. And there’s a lot of new tools on the market to help you be compliant with that as well. So it’s really staying up to date, would probably be…

Shelly Kramer: Right.

Maria Tringali: …what the biggest expectation is. Just watch those changes and make sure your business is compliant with them.

Shelly Kramer: Yeah. Absolutely. Well, Maria Tringali, what a great conversation. I have so enjoyed it. And I have a feeling our listening and viewing audience, might feel the same way. So thank you so much for joining me today for this back to basics, everything you need to know about sales tax and compliance, and other parts of this conversation. It has been fascinating. And I so appreciate it.

Maria Tringali: My pleasure. I loved being here. I love talking about sales tax.

Shelly Kramer: Well, I do, I love talking about not having to worry about sales tax.

Maria Tringali: Okay. Okay.

Shelly Kramer: And using a solution like a Avalara’s. Well, with that, to our viewing audience, here on LinkedIn, our listening audience, thank you so much for joining us. I will include Maria’s contact information in the show notes so that you can feel free to reach out, and connect with her on LinkedIn. I encourage you so much, if you are thinking about tax issues, stressing about it, wondering, worrying, whatever, make time to reach out. Because there is no better time to allay those fears, and to look at, explore solutions, so that you don’t have to be quite as worried or frustrated. And it only makes sense to get started.

Maria Tringali: I agree.

Shelly Kramer: And with that, this is a wrap for the show. Thanks again, Maria. And to our audience, we’ll see you again soon.

About the Author

Shelly Kramer is a Principal Analyst and Founding Partner at Futurum Research. A serial entrepreneur with a technology centric focus, she has worked alongside some of the world’s largest brands to embrace disruption and spur innovation, understand and address the realities of the connected customer, and help navigate the process of digital transformation. She brings 20 years' experience as a brand strategist to her work at Futurum, and has deep experience helping global companies with marketing challenges, GTM strategies, messaging development, and driving strategy and digital transformation for B2B brands across multiple verticals. Shelly's coverage areas include Collaboration/CX/SaaS, platforms, ESG, and Cybersecurity, as well as topics and trends related to the Future of Work, the transformation of the workplace and how people and technology are driving that transformation. A transplanted New Yorker, she has learned to love life in the Midwest, and has firsthand experience that some of the most innovative minds and most successful companies in the world also happen to live in “flyover country.”