This document outlines the implementation of Avalara tax software at a company. It includes configurations for global settings, companies, nexus jurisdictions, items, tax codes, and test scenarios. It also describes how to handle discrepancies between Avalara and the existing Vertex system, process adjustments, and obtain production support.

1. Avalara Implementation
(A Case Study for Avatax)
- Donald Fernandes
2015

2. 2
Agenda
(TO-BE) Taxation Process Flow
Scope + Assumptions
Avalara Configurations
Global Settings
Company
Nexus Jurisdictions
Items and Tax Codes
High-Level Test Scenarios
Finance Adjustment Processing
Avalara IT Production Support

3. 3
Scoping + Assumptions (June Go-Live)
USD Transactional Currency Only
Ship-To Countries with Export Compliance Only
US Sales Taxation Only (no International Sales, GST or VAT Tax)
Successfully captured Credit Card Transactions only
32 Nexus States (within US)
Customer Exemption Automation Functionality: out of scope
4 Bundle SKUs (see listed in reference)
Avalara Tax Filing Functionality: out of scope
Application only consumes standard Avalara (Avatax) Tax Codes
Vertex Configurations and Avalara Configurations equivalently match up
Tax Code for Parent SKU EQUALS Tax Codes for ALL respective Child SKUs

4. 4

5. 5
Avalara Configurations (Global Settings)
# Field Navigation Value(s)
1 Address Validation
Options
> Settings UPPERCASE
2 Exemption Certificate
Options
> Settings Enable ECMS (checked)
3 Account ID > Settings XXXX1234
4 License Ley XXXXAB456

6. 6
Avalara Configurations
(Business Users – Company Admins)
# Field Navigation Value
1 User Name > Settings > Manage Users TaxManager@company.com
2 User Name > Settings > Manage Users TaxAnalyst@company.com
…

7. 7
Avalara Configurations
(Transacting Company)
# Field Navigation Value(s)
1 Company Code Organization > Company ABC_COMPANY
2 Company Name Organization > Company ABC Company, Inc
3 Separate Reporting Entity Organization > Company Yes
4 Business Tax Identification #
(TIN)
Organization > Company XXXX1234
5 Default Country Organization > Company Settings United States
6 Base Currency Organization > Company Settings USD
7 Rounding Level Organization > Company Settings Line
8 Company Address Organization > Company Settings 100 Anytown,
AnyCity, CA-12345, USA
9 Primary Contact Organization > Primary Contact Tax Manager
TaxManager@company.com

8. 8
Avalara Configurations (Nexus Jurisdictions)
# Field Navigation Value(s)
1 Country Organization > Company > Nexus
Jurisdictions
United States
2 State Organization > Company > Nexus
Jurisdictions > Select
<see Nexus Taxability Matrix>
3 Tax Type Organization > Company > Nexus
Jurisdictions > Select
Use and Sellers Tax
4 Effectivity Dates Organization > Company > Nexus
Jurisdictions > Select
01/01/2010 - 12/31/2099

9. 9
Avalara Configurations (Items)
# Field Navigation Value(s)
1 Item Code Organization > Items SKU.1111
SKU.2222
SKU.3333
SKU.4444
2 Tax Code (All Items) Organization > Items DC010500
Computer Software (prewritten/canned)
electronically downloaded

10. 10
Avalara Configurations (Custom Rule)
# Field Navigation Value(s)
1 Rule Name
Region
Tax Code
Taxability
Organization > Tax Rules Name:
ZERO TAX FOR NJ DC010500
Condition:
NEW JERSEY
DC010500
Outcome:
No

11. 11
Sales Tax Computational Differences between Vertex and Avalara
Avalara Vertex Mitigation/ Resolution
Tax Code configured at the Parent
(Bundle) SKU level
Tax Code configured at the Child
(component) SKU level
Configure Child and Parent SKU
to use same (equivalent) Tax
Codes
All applicable Nexuses configured Some Nexuses may not be in sync Correct/Complete Vertex Nexus
configuration
All Customers will be treated as non-
Exempt
Automated Customer Exemption works
as configured
**Implement Avalara CertCapture
module, and migrate existing
Certificates
Address Lookup Logic:
Attempt #1: using City+State+Zip
Attempt #2: using Zip only
Address Lookup Logic:
Attempt #1: using City+State+Zip
Use Discrepancy Report
Offline corrective action (TBD)
** To be addressed in future release

12. 12
Avalara-Vertex Sales Tax Reconciliation Report
Report Name: Avalara-Vertex Sales Tax Reconciliation Report
Report Purpose: To assist reconciliation between Avalara and Vertex Taxation for eCommerce Orders
Report Parameters: Invoice (Transaction) Date From
Invoice (Transaction) Date To
Customer Number
Show Transactions: All OR Discrepancy Only
Report Data Filters: Invoice Source = Order Management
Sales Order eCommerce Flag = Yes
Invoice Status = Complete
Round (Avalara Tax Amount) <> Round (EBTax Tax Amount)
Report Columns and
Mockup:
Listed in order –
Invoice (Transaction) Number
Invoice (Transaction) Date
Invoice Amount
Sales Order Number
Ship To Customer Number, Name,
Ship To Address (concatenated string)
Bill To Customer Number, Name,
Bill To Address (concatenated string)
Customer Exemption Flag (DFF)
SFDC Quote Number (DFF)
SFDC Opportunity Number
Customer Purchase Order
Avalara USD Tax Amount (DFF)
EBTax USD Amount (total derived)
Report Format: Tabular Excel (preferred)
Report Platform: Oracle (SRS)
Report Execution Mode: On-demand for Internal Use of Company Technology only
Report Access: Receivables Manager, Receivables User, Tax Manager, etc AR responsibilities

13. 13
Test Scenarios
# Scenario/ Process Example Test Data
(non-Exempt Customers only)
Expected Result
1 Bundle SKU
A) Fully Taxable Nexus State
B) Non-Taxable Nexus State
C) Partially Taxable Nexus State
4 SKU * 32 Nexus State combinations
A) NY, MN
B) CA
C) CT
Compute appropriate Sales Tax,
and confirm via
Standard Avalara and Sales Tax
Reports
2 Same SKU as above w/ a Sub-State
Jurisdiction (example Special District)
LA – East Baton Rouge (Special)
CO - Denver
== as above ==
3 Same SKU as above w/ non-Nexus
State
VT
DE
Order should book and progress
as normal, with zero Sales Tax
11 Invalid US Address (City-Zip
combination)
Zip Code = 97083
State = NY
Zip and State should match
Order should not get booked
12 Different Sales Tax Amounts computed
from Avalara and Vertex
Oracle Discrepancy Report
should identify exception for
offline action
13 International Ship-To Address Country = GB Order should book and progress
as normal, with zero Sales Tax
14 Exempt Customer books Order <TBD> - Identify Over taxation within
Oracle Discrepancy Report
- Process Refund/ Re-
imbursement from Collecting
Authority

14. 14
Handling Vertex-Avalara Discrepancy (TBD)
Scenario Possible Cause Probability of
Occurance
How to Identify? Finance Mitigation (AR User)
Customer is
Overcharged
Sales Tax
Calculation Error
OR
Missing Exemption Cert
OR
<TBD>
Low-Medium Customer
Company Customer
Care
Finance Team
OR
Avalara Discrepancy
Report
Finance Team
1. Contact Customer to receive CC details
2. Validate and receive approval for Refund
3. Process Refund using Virtual Terminal on
Authorize.net for corr. Transaction ID
4. Provide record of Refund to Tax,
Customer Care Departments
Customer is
Undercharged
Tax or no
Sales Tax
Calculation Error
OR
<TBD>
<TBD> Avalara Discrepancy
Report
Finance Team
1. Do not Claim Tax from Customer
2. Record discrete Adjustment for Cash(CR)
and Tax Expense (DR) in Oracle (w/ no
Revenue/ AR impact)
Notes:
• Avalara is our accurate reference for Taxability Driver Configurations (except Customer Exemptions)
• Business policy is to only provide Refunds to Tax component of the Sale
• Refunds are processed using Credit Card and not Check, as Payment Method
• Temporary access will be provided to AR Manager for processing Refunds on Credit Card Gateway
• There is no impact on Aging, Receivable or Revenue accounts owing to above Tax adjustments.

15. 15
Adjustment Functionality (Avalara)
Scenario Example Data
(Sales Orders)
How to Identify? Resolution Steps on Avalara
(Manual process subject to SOX Approvals)
Customer Credit
(Refund) for fully
Collected Invoice in
Oracle
019651 AR/OM Team to advise
Tax Department
Create a NEW Transaction of Document Type “Return Invoice”
and populate appropriate Reference Code
Cancelled Orders,
which were never
Invoiced or Collected
014637
015065
015464
016293
017119
023923
Sales Ops to advise
Tax Department
Query existing Transaction and use the VOID function
Partial Invoice
Adjustment (Taxable
Amount) in Oracle
<none> AR/OM Team to advise
Tax Department
Edit existing Transaction using appropriate Adjustment Reason

16. 16
Production Business Support
Company Name: Company Technology
Avalara Support URL: http://www.avalara.com/support/
Avalara Support Tel: 1-877-780-4848
Support Email: Support@Avalara.com
Helpdesk@company.com
Service Alerts: http://status.avalara.com/
KB URL: https://help.avalara.com/
AvaTax Production URL: https://admin-avatax.avalara.net/
AvaTax Sandbox URL: https://admin-development.avalara.net
Avalara Account Number: XXXXYYYYY
Account Manager (Vendor): SalesRep@@avalara.com
Business Process Owner TaxManager@company.com