Avalara Offers Solution to SSTP Sales Tax Implementation;
New York Times Editorial (7/5) Calls for Internet Sales Tax;
Avalara Responds with Seamless Solution for Small, Medium-Sized Businesses

BAINBRIDGE ISLAND, Washingon, July 6, 2005--Yesterday, the New York Times editorially challenged America to end a 13-year-old Supreme Court-mandated moratorium on taxing Internet sales, a moratorium that the Times says costs local and state governments $20 billion a year in lost revenue, and noted that the bulk of these lost-revenue sales were conducted by small businesses selling on the Internet http://www.nytimes.com/2005/07/05/opinion/05tue3.html?.

The Times noted that many states are participating in what's known as SSTP -- the Streamlined Sales Tax Project -- with the intent of encouraging the voluntary collection of sales taxes on all cross-jurisdictional sales. Under this plan, smaller businesses might be exempted from the process, primarily because the technology was not available to make it cost-effective -- or even possible -- for smaller retailers to calculate and collect those taxes. The Times editorially advocated against any such tax break for small businesses, and also called for Congress to ratify this approach and apply it uniformly on a national basis.

What the New York Times didn't report is that -- while the decision to extend sales tax to Internet and other cross-jurisdictional sales is essentially a political decision -- the means by which small businesses could participate in such a sales tax program already exists. Avalara (http://www.avalara.com), a fast-growing sales tax calculations business serving small and medium-sized businesses across the nation, already has in place and operational an on-demand, web-based solution to this sales tax calculation challenge.

"The questions of taxing Internet transactions -- and of providing smaller businesses an exemption -- are both political questions, ones that are being addressed, and ones that must be resolved by state legislatures or Congress," according to Avalara's Founder and Chief Tax Automation Officer, Rory Rawlings. "However, the technology to make tax calculation -- and tax collection -- possible for even the smallest online businesses already exists. Avalara's AvaTax ST has been providing this service for small and medium-sized businesses for a year now, and we are meeting those needs for 350 SMB-market businesses."

Currently, businesses with a nexus -- a physical presence in multiple states -- are required to calculate, collect and remit sales tax. However, there are more than 8,000 taxing jurisdictions in the U.S., and until now, only the largest companies could afford to keep up with those jurisdictions -- as well as with the more than 900 tax-rate changes which take place each year. One professed purpose of SSTP is to make it easier for businesses to comply with this complex set of tax laws -- first, by standardizing and literally streamlining the taxes, and then by setting up a series of third-party providers who would handle these tax obligations for businesses.

"Under the Streamlined Sales Tax Project," Rawlings explained, "the sellers' obligation to calculate, collect and remit sales tax will be outsourced -- at no cost to the seller -- to one of a few qualified third-party services approved by the SSTP's steering committee. To date, seven companies have been certified by SSTP as sales tax service providers, and of those seven, only Avalara currently serves the SMB market. Avalara's on-demand, web-based service works from within the sellers' business accounting software systems, automatically and seamlessly, and under SSTP, it will function in the same fashion. Currently, Avalara is integrated with ten of the most popular accounting packages marketed for small and medium-sized businesses.

"As the Streamlined Sales Tax is adopted," Rawlings pointed out, "more accounting applications and e-commerce shopping cart developers will integrate with sales tax service providers such as Avalara, to ensure that their end-users have access to this no-cost SSTP tax calculation and collection service.

"We are also currently integrating with some of the market's most popular payment gateways," Rawlings continued, "in order to provide end-users with a single point of integration for both sales tax calculation and the credit card authorization-and-payment process. And, in addition to our sales tax calculation service, Avalara offers an easy-to-use administration console designed for small business owners and operators who are not familiar with the nation's complex set of sales tax laws, enabling virtually any business to be tax-compliant with little effort."

About AvaTax ST™

AvaTax ST is the only Web-service-based sales tax solution currently on the market that runs seamlessly integrated within commonly-used SMB accounting systems. AvaTax ST automates the sales tax compliance function by instantly and accurately performing a variety of critical functions, including: address validation, jurisdiction and rate research, tax calculation, detailed reporting, and the automatic generation of pre-populated returns for any of the over 8000 North American taxing jurisdictions.

Designed for small and medium businesses, AvaTax ST integrates with more SMB financial applications than any other sales tax solution on the market today. The growing list of integrated editions includes AvaTax ST for Best Software's MAS 90(R) and MAS 200(R), ACCPAC Advantage Series(TM), Microsoft's (MSFT) Great Plains, Navision(R), MS Small Business Financials, Scala, QuickBooks and Open Systems' OSAS and Traverse (OEM). AvaTax ST's affordable, subscription-based pricing means sales tax automation can fit the budget of any business, any size.

For businesses running e-commerce, third-party, custom-built, or any other system, Avalara's AvaTax On-Demand™ makes the Avalara Web services API available, with Software Developer's Kit (SDK) and full testing and support, for easy integration with any system.

About Avalara