Ecommerce Case Study

Lionel Racing gets a tailwind from Avalara AvaTax

Speeds through changes brought by South Dakota v. Wayfair, Inc.

“Going with AvaTax saved us a lot of steps and made for a pleasant transition instead of one that was pressured and chaotic.”

—Rick Gemereth, CIO, Lionel Racing


Tax challenges

  • Compliance risk
  • Integration with business systems

Systems

  • NetSuite ERP

Products


Results

  • Confident compliance
  • Streamlined processes
  • Easy integration

A subsidiary of Lionel — famous for its model trains — Lionel Racing sells die-cast models of legendary racers of the past to current NASCAR superstars on the web and through various companies at racetracks across the United States. In addition, Lionel Racing sells apparel exclusive to their Racing Collectables Club of America (RCCA).

Lionel got into the NASCAR die-cast model business when it acquired the die-cast segment of business from Motorsports Authentics in 2010. With that acquisition came Rick Gemereth, who heads the IT function for Lionel as its CIO. Rick was already using Avalara and NetSuite at Motorsports Authentics, and in 2012, he moved Lionel’s entire business, including ecommerce, over to those systems.

A hairpin turn for sales tax

Lionel had been collecting sales tax in only six states (the ones where Lionel had an operating presence) prior to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc., which upheld the rights of states to charge tax on purchases made by out-of-state sellers, even if the seller does not have a physical presence in the state.

“Like every other online business in America, our tax obligations turned on a dime,” says Rick. “As states began defining their own thresholds for taxable sales, we found ourselves collecting sales tax in twenty 20 pretty fast — and we expect that number to grow.”

The sudden addition of all those states brings with it a great deal of complexity, since tax rates can vary from jurisdiction to jurisdiction. “There are around a hundred counties in North Carolina, for example, and each one has the ability to have its own requirements that change all the time. Compliance is a priority for us — and it’s a moving target.”

Rick knew that sales tax automation was the answer for Lionel. And because he had used Avalara in the past, he knew who to call. “We needed a partner we could trust,” he says, “who could integrate easily with NetSuite and provide a path forward for the company as we continue to grow.”

Start your engines

Rick’s previous experience with Avalara gave him confidence. “I knew firsthand that the support was very responsive and reliable,” he says. “We were able to benefit from having that relationship already established, and now we’re building on it. Our account manager has been a great resource for us, and Avalara’s webinars and events have really helped us extend our knowledge of the landscape and the tools available to us.”

If Avalara AvaTax hadn’t already proven itself to Rick in his previous role, he says the search for a solution would have consumed a great deal of time and money. Aside from the prebuilt integration with NetSuite, his requirements included affordability, ease of deployment and use, referenceable clients, longevity, and a history of success in accurate sales tax collection. “Going with AvaTax saved us a lot of steps,” he says, “and made for a pleasant transition instead of one that was pressured and chaotic. I never felt like our back was against the wall.”

Lionel Racing’s victory lap

With AvaTax up and running — and fully integrated with NetSuite — Rick doesn’t worry about adding new states as they define thresholds for sales tax collection. “We’ll go into AvaTax and flip a switch, and we’re on our way,” he says. “That ease of use — how quickly we can respond when states change their requirements — is important to how we operate our business, so we can remain compliant and avoid audits.”

Using AvaTax to automate sales tax collection also helps Rick stay focused on more strategic matters. “I don’t lose sleep worrying about how we’re going to deal with changing sales tax requirements,” he says. “My time is spent enhancing what we’re doing to continue growing our business.”

In the wake of the Wayfair decision, Rick provided: “My guidance to anyone involved with collecting taxes is do not underestimate the effort involved and find a trusted partner to help make the collection of taxes accurate and valid. That’s what I did.”

About Lionel Racing 

Lionel Racing is the market leader in the design, promotion, and distribution of licensed die-cast race cars. A division of Lionel Trains, Lionel Racing makes and sells replica NASCAR die-cast and other cars through a variety of channels, including corporate, national accounts, trackside, online, a network of specialty dealers, and the Racing Collectables Club of America (RCCA). Located near Charlotte Motor Speedway, Lionel Racing has the pulse of the motorsports community and is committed to giving fans the very best in die-cast collectibles. For more information, visit lionelracing.com.


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