Slides from the Tax Tuesday webinar "Enabling Compliance in the Cloud." Presented March 28, 2017 by John Landy, CTO and Chuck Maniace, Director of Regulatory Analysis at Sovos.

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T a x T u e s d a y W e b i n a r
Overcoming Common Sales and Use Tax Challenges
for Manufacturers
How IT can leverage the cloud to support efficiency, scale and compliance
March 28, 2017
S o v o s C o m p l i a n c e P r e s e n t e r s
John Landy, Chief Technology Officer
Charles Maniace, Director – Regulatory Analysis

2. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
2
Agenda
• Introductions
• Trends impacting manufacturing –
Compliance problems and implications
• Strategic approach to compliance
leveraging cloud technology
• Questions

3. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
3
SOVOS, the leader in Business-to-Government tax compliance
Sales & Use Tax
1099 Reporting
Beverage Alcohol
ACA
AEOI
E-Commerce Tax
Automation
LatAm
Compliance
VAT Reporting

4. 4
• Trusted by more than half of the fortune 500.
• 4,500 clients operating in 120 different
countries.
• The #1 private filer of IRS 1099 forms.
• #1 software provider in the beverage alcohol
industry.The global leader in in tax compliance
and business-to-government
reporting software.

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Trends Impacting Manufacturers
…and what is making Sales and Use Tax
compliance harder

6. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
6
Trends Impacting Manufacturers
Technology
Disruption
Growth /
Expansion
Operational /
Process
Improvement
Regulatory
Complexity
Manufacturing at a crossroads

7. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
7
Technology
Disruption
Growth /
Expansion
Operational /
Process
Improvement
Regulatory
Complexity
Trends Impacting Manufacturers: Disruption
Will invest 6% of revenue in
R&D in the next 2 years
Have a defined goal to reduce
product development cycle
time (32% with target of >11%)
49%
55%
Source: Industryweek Future of Manufacturing: 2020 and Beyond, May 2016,

8. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
8
Technology
Disruption
Growth /
Expansion
Operational /
Process
Improvement
Regulatory
Complexity
Trends Impacting Manufacturers: Disruption
Implications for IT:
• Greater technical adaptability to
support rapid change in the business
• Resources focused on reducing
operational cost and supporting new
production technology
• Increased need for IT to focus
resources on enabling growth
opportunities

9. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
9
Technology
Disruption
Growth /
Expansion
Operational /
Process
Improvement
Regulatory
Complexity
Trends Impacting Manufacturers: Growth
of manufacturers say growth
is a top priority over the next
2 years.
say they have plans to enter a
new geographic market.
74%
56%
Source: http://www.nam.org/outlook/

10. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
10
Technology
Disruption
Growth /
Expansion
Operational /
Process
Improvement
Regulatory
Complexity
Trends Impacting Manufacturers: Growth
Implications for IT:
• Supply chain, distribution and
business relationships
• New systems and processes (web
store, purchasing, ERP, etc.)
• More transactional data to
aggregate and reconcile

11. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
11
Technology
Disruption
Growth /
Expansion
Operational /
Process
Improvement
Regulatory
Complexity
Trends Impacting Manufacturers: Operations
Manufacturing IT leaders say
improving business processes
is top priority
Taking buy rather than build
approach to improve
technical agility
72%
47%
Source: Harvey Nash/KPMG CIO Survey 2016

12. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
12
Technology
Disruption
Growth /
Expansion
Operational /
Process
Improvement
Regulatory
Complexity
Trends Impacting Manufacturers: Operations
Implications for IT:
• Legacy technologies harder to
improve and support
• Decentralized and/or redundant
processes
• Increased reliance on IT from
business partners
• Slower response times

13. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
13
Technology
Disruption
Growth /
Expansion
Operational /
Process
Improvement
Regulatory
Complexity
Trends Impacting Manufacturers: Regulatory
Most common business
problem is unfavorable
regulatory climate
of the top 10 market
challenges relate to regulation
#2
3
Sources: Industryweek Future of Manufacturing: 2020 and Beyond, May 2016
www.nam.org/Outlook

14. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
14
Technology
Disruption
Growth /
Expansion
Operational /
Process
Improvement
Regulatory
Complexity
Trends Impacting Manufacturers: Regulatory
Implications for IT:
• Expanded footprint means more
obligations / rates and rules to
support
• Need for increased agility for timely
systems administration / updates and
filing processes
• Changing regulations often demand
different data
• More time supporting compliance
activities / audit support

15. Compliance is Now a Barrier to Growth
Technology-enabled
enforcement of tax and
reporting at the
transaction level.
Patchwork of regulatory
requirements that span
states, regions and the
globe.
Increasingly aggressive
regulatory environment.
Aggressive
Rapid
Response
Borderless

16. 16
Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
16
From Reactive to … Intelligent Compliance
Most businesses are tactical and
reactive:
• at risk in ways they can’t see
coming
• burdened by onerous
processes and unreliable,
disconnected systems
• unable to grow as quickly as
C-suite desires
Global Leaders are strategic and
able to project 3-5 years out:
• real-time access to
comprehensive regulatory
analysis
• full tax automation embedded
with core systems
• scalable solutions capable of
supporting businesses as they
grow

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How cloud-based tax solutions can
remove the compliance barrier
A strategic approach to drive growth
and operational efficiency

18. Intelligent Compliance In the Cloud
Secure, adaptable
platform that can
supports your
business strategy
Empower business
owners
Complete and
accurate regulatory
analysis / capabilities
Accuracy Agility Efficiency

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Accurate Tax Determination
Overcoming rapidly changing and expanding
regulatory obligations

20. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
20
There are over 10,000 taxing jurisdictions in the US…
2016 at a glance:
State and Local Rate Changes: 1,995
Total Rule Changes in our Determination Engine: 341,018
Total Form Changes in our Filing Solution: 296/1394 = 21%
“Too much time spent on regulation, compliance, taxes and not enough resources
dedicated to growth of the business.”
Electrical equipment and appliance manufacturer
National Association of Manufacturers Outlook Survey – Q3 2016

21. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
21
Typical Manufacturing Filing Process
Buy: Accounts Payable
Purchase Transactions:
PO, P-Card, Invoice, Other
Validation
Correction, Short Pay, Accrual
Data Consolidation
Review: Corrections /
Reconciliation
Filing:
Returns Prep / Transmittal
DOR
1
Invoices / Billing
Taxability:
Sales, Exemptions
Sell: Accounts Receivable
Audit Audit
Tax Systems:
People:
ERP
Taxability
Determination (Use, Direct Pay,
Vendor Validation)
AP
Tax
IT
Pur
RF XL
AR CRM
E com XL
AP CSRAR
Credit
Pur
DOR
2
DOR
3
DOR
4

22. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
22
Typical Manufacturing Filing Process – Rate or Rule Change
Buy: Accounts Payable
Purchase Transactions:
PO, P-Card, Invoice, Other
Validation
Correction, Short Pay, Accrual
Data Consolidation
Review: Corrections /
Reconciliation
Filing:
Returns Prep / Transmittal
DOR
1
Invoices / Billing
Taxability:
Sales, Exemptions
Sell: Accounts Receivable
Audit Audit
Tax Systems:
People:
ERP
Taxability
Determination (Use, Direct Pay,
Vendor Validation)
AP
Tax
IT
Pur
RF XL
AR CRM
E com XL
AP CSRAR
Credit
Pur
DOR
2
DOR
3
DOR
4

23. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
23
Typical Manufacturing Filing Process
Buy: Accounts Payable
Purchase Transactions:
PO, P-Card, Invoice, Other
Validation
Correction, Short Pay, Accrual
Data Consolidation
Review: Corrections /
Reconciliation
Filing:
Returns Prep / Transmittal
DOR
1
Invoices / Billing
Taxability:
Sales, Exemptions
Sell: Accounts Receivable
Audit Audit
Tax Systems:
People:
ERP
Taxability
Determination (Use, Direct Pay,
Vendor Validation)
AP
Tax
IT
Pur
RF XL
AR CRM
E com XL
AP CSRAR
Credit
Pur
DOR
2
DOR
3
DOR
4

24. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
24
Complete
Regulatory
Analysis
Accurate Determination
Value to you:
• SaaS is ideal for complex, rapidly
changing regulatory environment
• No more rate files or ERP work-
arounds
• Easily handle – hundreds or
thousands of tax rates and rules,
caps, thresholds, forms and filing
methods
• Ability to manage data from all
transactional systems
1
Key Capabilities:
• SaaS
• Technology fed by
expert regulatory
analysis
• Capabilities designed
for complexity
• System
interoperability for
easy data transfer

25. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
25
Complete
Regulatory
Analysis
Accurate Determination
Value to you:
• One Tax Determination platform
and vendor to manage
• Single point of calculation
• Reduced maintenance
• Capabilities Tax and Finance need
for all transaction types – AP, AR,
Use Tax, etc.
1
Key Capabilities:
• Centralized platform
for determination
• Real time and On
Demand flexibility for
all transaction types
2 Single
Point
of Truth

26. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
26
Complete
Regulatory
Analysis
Accurate Determination
Value to you:
• No more patches or system
updates to manage
• Faster response time for
business change
• Reduced audit risk
1
Key Capabilities:
• Automatic Updates
• Every rate / rule to
support business
change
2 Single
Point
of Truth
3Always
Accurate

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Agile Systems to Support Growth
Overcoming business and technical change

28. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
28
Gartner predicts that within the next three
years, more than 30 percent of the 100
largest vendors’ new software investments
will have shifted from cloud-first to cloud-
only — thereby pushing any enterprise
fence-sitters in the direction of cloud.

29. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
29
What are manufacturing IT leaders saying about the cloud ?
www.kpmginfo.com/cioagenda

30. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
30 System
Infrastructure
Agile Systems
Value to you:
• No environment to maintain
• Minimal local footprint
• Continual investment and
innovation (rather than every 3-5
years)
1
Key Capabilities:
• Hosted environment
• World class
infrastructure, data
centers and support
• Continual supplier
investment

31. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
31 System
Infrastructure
Agile Systems
Value to you:
• Rest assured your data is
safe and secure:
• SSAE 16 SOC 1
• SSAE 16 SOC 2
• ISO 27001
• Meet or surpass requirements
wherever you do business
1
Key Capabilities:
• Security Certifications
• Annual penetration
testing
• Encryption in transit
and at rest
• Employee Security
certifications
• Frequent client
audits
2 Data
Security

32. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
32 System
Infrastructure
Agile Systems
Value to you:
• Reliable Up Time
• Backup protocols for critical
business functions
• Easily and quickly add users,
capabilities, geographies and
solutions – with little IT effort
• Focused innovation
1
Key Capabilities:
• High Redundancy
• Scale “on demand” as
needs change
• Easily expandable
platform
• Best of breed
innovations
2
Data
Security
3
Performance/
Adaptability

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Save Money and Improve
IT Operations
Overcoming inefficiencies by giving control back to business users

34. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
34
Manufacturing Leadership looking for Operational Efficiency
www.kpmginfo.com/cioagenda

35. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
35 Improved
Response
Improve IT Operations
Value to you:
• Let the vendor manage the
complexity and the updates
• Help business users help
themselves
• Minimize the risk now by laying
foundation for future growth
• Compliance will always be changing
• Broader impact as you grow
• US is just the beginning – VAT? E-Invoice?
1
Key Capabilities:
• Turnkey compliance
for rapid change
• Business Level
Reporting:
• Data aggregation
• Reconciliations
• Benchmark KPI’s

36. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
36 Improved
Response
Improve IT Operations
Value to you:
• Allow IT to focus on strategic
activities
• Add needed capabilities faster with
less team impact
• Save time and reduce risk by
streamlining vendors
1
Key Capabilities:
• Streamline maintenance
and expansion
• Give control to users
• One vendor to
manage
2
Focus on
the Core

37. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
37 Improved
Response
Improve IT Operations
Value to you:
• No need for CapX spend (or
resources to maintain)
• Low ongoing operational cost
• Turnkey, fast start up and rapid
time to value
• Streamline providers for best value
1
Key Capabilities:
• Single provider
• Simpler, less costly
implementation
• Optimize capacity of
existing resources
2
Focus on
the Core
3
Reduce
Costs

38. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
38
SaaS Delivery - Rapid Time to Value
Cloud Based
SW Acquisition
On-Premise
Live in
Production
HW Acquisition
Installation
Non-Production
Test
Value Gap— Sovos decreases risk of failure and speeds time to value for the
customers
Time
∆TimetoValue
Implementation
Stages

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Questions to ask yourself…

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40
Is your team ready for intelligent compliance?
• What is happening in the business that is likely to be your top priority over the next 2-3 years? Will this create a shift
in resources or focus? If so – what is your plan to support current processes?
• Does your team have any process improvement objectives?
• Have you noticed the Tax or Finance Team coming to you more often for help or support? Is that getting in the way of
higher priority projects?
• Has the amount of time your team spends on supporting compliance changes and updates increased? How much?
How many systems need to be touched each time there is a change?
• What transactional business systems are likely to be added or changed over the next few years?
• What are the implications for Sales and Use Tax compliance, data and ongoing maintenance?
• How many system interfaces are you maintaining? How much time is that taking?
• How often are you called upon to build complex queries and reports in order to analyze sales and use tax
transactional data?
• Does your team maintain an environment to store tax documents (i.e. exemption certificates)? How does that work?
Is your tax team happy with that approach?
• What are the impacts on you or your team when there is an audit?
Are you satisfied with your answers to the questions above?

41. Proprietary and Confidential the information and materials in this document are not for use or disclosure outside of Sovos Compliance, LLC. except under express written consent.
41
A Few Questions to Ask a Vendor?
• Is your software able to work with all of our existing business systems?
• Can you support all of the product codes and tax content we need everywhere? US and
International?
• What data security certifications do you have? Are you ISO 27001 certified?
• Tell me about your implementation process – how long does that take?
• How is the service and support organized after sale support?
• Are you able to provide a full end to end solution – determination, exemptions and filing?
• Can your system be used real time and “on-demand” based on our needs?
• What kind of reporting do you provide for Audit purposes?
And lastly – Will the answers be the same three years from now?

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Intelligent Compliance in
the Cloud
Regulatory Analysis + Cloud
Software
Make sure your long term compliance strategy
enables you to:
 Respond to new tax and reporting obligations
you don’t yet see coming
 Operate with confidence that your business is
running with the most complete and accurate
regulatory analysis
 Be in control of the data you need across a
patchwork of systems
 Allows you to adapt quickly with the compliance
capabilities you need on a reliable, stable and
secure global platform.

43. T H A N K Y O U
Visit
www.sovos.com/solutions
for more information on Sovos solutions
for Sales and Use Tax compliance.
W W W . S O V O S . C O M