Partner profile: Microsoft Dynamics – Empowering business together

Microsoft Dynamics 365 Business Applications encompass a vast array of solutions, including ERP, CRM, Field Service, POS/Commerce, and more, for companies in core verticals such as manufacturing, retail, distribution, and software.

It’s not only for enterprise-level operations, however: Dynamics 365 is designed for organizations of all sizes, including small- and medium-sized businesses. Bringing together customized products, people, and data, the benefits are much the same regardless of industry or company size — including increased agility, more efficient workflows, and better resource allocation.

Ultimately, it all helps businesses drive growth by reaching more customers in more places. But there’s a challenging side effect to that kind of growth — tax compliance. That’s why Avalara has worked alongside Microsoft since 2004, delivering integrations that streamline management of those compliance obligations right within Dynamics and Dynamics 365, which launched in 2016.

Traditionally, most ERPs had a limited tax compliance offering, which was largely OK — managing tax compliance was still a hassle, but many companies were able to handle it manually. Others, seeking more streamlined solutions, took advantage of the automation tools we helped Microsoft integrate between 2004 and 2017.

Then, in 2018, the U.S. Supreme Court made its landmark decision in South Dakota v. Wayfair, Inc., which paved the way for states to create and enforce economic nexus laws. These new economic nexus laws required businesses to register, collect, file, and remit taxes in states where they sold into but had no physical presence. A business that might have collected sales tax in three states might all of a sudden be obligated to collect in all 50.

We worked with Microsoft to help them understand what Dynamics users needed in the post-Wayfair world — where the current holes were, why frequent updates are so vital, and so on. We also highlighted the importance of a flexible framework, as tax policies and regulations are always changing, and the Microsoft Tax Calculation Service API introduced in 2023 delivers exactly that.

Thanks to this lasting partnership, the tax solutions within Dynamics are designed for today’s tax landscape — and they’re well-positioned to pivot for tomorrow’s challenges, too.

Our integrations connect the Avalara Compliance Cloud to the Dynamics applications and interfaces business owners use already, allowing them to automate compliance no matter what they sell and how and where they sell — online or in person, domestically or internationally.

Most Dynamics integrations are built and maintained by Avalara; all are built to our certification requirements, ensuring they not only provide core and advanced compliance functionality, but also deliver a smooth, secure experience.

Key end-to-end compliance capabilities include:

• Fundamental sales and use tax tasks. Avalara makes registration, calculation, filing returns, and remitting payment seamless, whether it’s in just a few jurisdictions, hundreds, or more. And robust reporting capabilities give you full visibility into everything.
• International compliance. Selling across borders adds even greater complexity to tax compliance. Our integrations can support VAT and other international taxes along with the more than 12,000 sales and use tax jurisdictions in the U.S.
• Exemption management. Tax-exempt sales require special certificates — which need to be validated and then stored so sellers can document the exemption in case of an audit.
• Nexus tracking. Different jurisdictions have different economic nexus triggers, but Avalara can track potential liability and alert businesses when they near a threshold.

These capabilities create significant benefits:

• Accuracy and consistency. Our systems are regularly updated to reflect new rules and rate changes, and we verify U.S. addresses with rooftop accuracy, which is more accurate than simply using ZIP codes.
• Reduced risk. Audits are a big risk — states and municipalities are always looking for revenue, and thanks to technology, it’s easier for them to spot discrepancies in expected versus collected tax. By using automated solutions to more effectively manage compliance, companies can reduce the risk of fines and penalties.
• Better resource allocation. Instead of having people manually manage compliance — which increases the risk of errors — automation means they can be redirected to work on more profitable (and enjoyable) initiatives.

These benefits aren’t theoretical. Companies of all kinds are realizing them every day, getting more out of their Dynamics solution and streamlining their tax compliance at the same time.

Electric Motor Supply Company (EMSCO), one of the largest dealers of refurbished industrial electrical equipment in the U.S., suddenly found itself out of compliance in states across the country following the advent of economic nexus laws. The company, which had been calculating sales and use tax manually — it only had to worry about one state before the 2018 Wayfair decision — quickly understood that was no longer an option. Because EMSCO already used Dynamics 365, it was important to find an integrated solution; today, the company relies on Avalara for calculations, returns, and more. “It saves us a ton of time,” says an EMSCO sales manager. 

Hickory Farms has been a household name for more than 70 years, selling food gifts and specialty items — but as it looked to modernize, its systems weren’t quite up to the task. Because the company uses a multichannel approach, and often sells gift boxes with both food and nonfood items (which can be taxed differently), it needed a powerful solution for its unique challenges. First, Hickory Farms implemented Dynamics 365, and then added Avalara AvaTax and Avalara Exemption Certificate Management. Now, the company is better able to meet the changing desires of customers; for instance, it can take a gift order from someone at a retail location, have it fulfilled from a warehouse and shipped to a different jurisdiction entirely — with the tax for that jurisdiction correctly applied right in the store.

Micro Matic, a leading global supplier of dispensing solutions and equipment for beverages including beer, wine, coffee, and others, paid the price for its compliance shortcomings — literally. The company was audited by a few states, one of which imposed a large penalty in addition to the taxes that were due. Micro Matic quickly chose to use Avalara within its existing Microsoft Dynamics system to better protect the company, with stellar results: It was audited by the same state six years after the original audit, and came back completely clean. Another benefit? The company’s CFO used to spend 4-5 days each month putting together returns for 31 different states. Today, that same process takes 15-20 minutes.

Want to learn more about how using Avalara’s automated compliance tools in your Dynamics system can reduce risk and enable growth? Visit the Avalara Microsoft Dynamics page to see all the details and schedule a demo.