John Kallas, who has a passion for motorcycles himself, came out of retirement to become the chief financial officer for Arlen Ness Motorcycles. “At the time, the company was trying to do sales tax on its own,” he says. “We filed manually and managed all the different counties and cities, updating the tables in our ERP as the various jurisdictions would update their tax tables.”
John felt that the manual approach, aside from being inefficient, was just too risky. “Then came the South Dakota v. Wayfair decision, and that changed everything for us,” he recalls. Arlen Ness Motorcycles is based in California but was registered in South Dakota and Florida because “those are two large states that have large motorcycle rallies,” he explains. “That tax scenario got too overwhelming.”
Adding to the complexity, about 70% of the company’s business is sales tax exempt — and again, the process for managing exemption certificates was entirely manual. “We called it the binder approach,” John laughs. “Nobody had the time to go through binders that were three, four inches thick and went back years and years. A lot of times, we had to pick up the sales tax amount if we did the calculation wrong or the customer was no longer exempt. We were spending thousands of dollars of our own money to cover that sales tax exposure.”
