US and Canada Returns
Updated August 21, 2017
1. Use of the Services.
a. Account Set-Up. Customer shall provide Avalara with all information requested by Avalara to establish and set up Customer’s account for Avalara Returns (the “Onboarding Requirements”). Such information includes: (i) a list of taxing jurisdictions for which Customer requests Avalara prepare returns (each a “Filing Jurisdiction”); (ii) the dates for filing Returns (defined in Section 3(a)) in each of the Filing Jurisdictions (the “Filing Calendar”); (iii) the entities (e.g., Customer or its Affiliates) for which Avalara will be preparing Returns (the “Filing Entities”); (iv) tax registration numbers and log-in information for each entity in each Filing Jurisdiction sufficient to allow Avalara to identify and access Customer’s account in that Filing Jurisdiction (the “Account Information”); (v) copies of previous filings in the Filing Jurisdictions, as requested by Avalara; (vi) completed power(s) of attorney, including the power of attorney described in Section 2(c)(i); and (vii) other information necessary to properly configure Customer’s Account and the Returns. Customer authorizes Avalara to access Customers accounts using Customer’s Account Information. Customer is solely responsible for accurately providing and maintaining accurate, complete, and current information regarding the Filing Jurisdictions, the Filing Calendar, the Filing Entities, and the Account Information (collectively, the “Filing Information”), and Avalara has no obligation to audit, verify, correct, or maintain any Filing Information.
b. Changes to Filing Information. Customer shall submit any changes to the Filing Information to Avalara no later than the last calendar day of the month to which the Tax Data is attributed. Any changes received after the last calendar day will be implemented and become effective in the subsequent month.
2. Customer Obligations.
a. Tax Data. Customer is solely responsible for the accuracy and completeness of all the data necessary to properly complete a tax return (the “Tax Data”) and all Filing Information. Avalara does not audit, validate, or verify Tax Data. Customer shall transmit to Avalara via the method designated by Avalara all Tax Data for Customer’s Return(s) before the Tax Liability Approval Deadline (defined below). Customers utilizing Avalara for Data Transformation Services shall deliver all Tax Data to Avalara by the 5th calendar day of the month in which the Tax Data is to be reported to the Filing Jurisdictions. “Data Transformation Services” are Services wherein Avalara, pursuant to a signed SOW, will convert Customer’s transactional data that meets Avalara’s minimum transactional data requirements into a complete data set that allows for import into Customer’s Account. Data Transformation Services are performed at Customer’s direction and expense, and the resulting data set is part of Customer’s Tax Data.
b. Tax Liability. Customer will be able to view and approve Customer’s tax liabilities, which is based on the Tax Data, to Filing Jurisdictions (the “Tax Liability”). Customer is solely responsible for the accuracy and completeness of Customer’s Tax Liability and may modify its Tax Liability up to the deadline specified in the Documentation for Returns to be filed in that month (“Tax Liability Approval Deadline”). Customer’s Tax Liability is updated daily to include new or edited data until approved. After the Tax Liability Approval Deadline, Customer’s Tax Liability is locked and deemed approved by Customer. Customer’s Account will display any tax amounts due (the “Taxes”) based on the approved Tax Liability.
c. Funding. In accordance with this Section 2(c), Customer shall timely make sufficient funds available to pay the Taxes for any applicable Return (“Tax Funds”) prior to the deadline specified in the Documentation. Avalara shall not provide any Tax Funds. Notwithstanding any other provision of this Agreement, Customer shall defend, indemnify and hold Avalara and its Affiliates, subsidiaries, licensors, officers, directors and employees harmless from any loss, cost, damage, liability or expense (including, but not limited to, reasonable attorneys’ fees), arising out of or related to Customer’s failure to provide immediately available Tax Funds. In order for the Tax Funds to be remitted timely to the applicable Filing Jurisdiction, Customer must do the following:
i. Customer shall execute limited power(s) of attorney in the form requested by Avalara. Upon termination of Customer’s subscription to Avalara Returns, Avalara will cease to use any power or authority granted by a power of attorney signed by Customer.
ii. Customer shall provide bank account information for a bank account from which Customer authorizes Avalara to draw by ACH to pay Customer’s Taxes and any applicable Avalara Returns fees (the “Bank Account”) by the deadline specified in the Documentation. If the ACH Avalara draws from the Bank Account is cancelled or returned other than by Avalara, that will be considered a failure to timely fund the Bank Account.
iii. Customer shall ensure the Bank Account has sufficient Tax Funds to pay the Taxes and, if applicable, Customer’s Avalara Returns fees by the deadlines provided by Avalara. If Customer fails to timely fund the Bank Account, Customer shall remit payment for the Taxes directly to the applicable Filing Jurisdiction plus any interest or penalties that may accrue. Avalara may suspend or terminate Customer’s subscription to the Avalara Returns immediately upon notice if Customer fails to timely and sufficiently fund the Bank Account.
iv. Customer authorizes Avalara to (i) withdraw the Tax Funds to pay the Taxes in accordance with the Filing Calendar, including making any required prepayments; and (ii) if applicable, withdraw Customer’s Avalara Returns fees.
3. Avalara Obligations.
a. Standard Sales and Use Tax Returns Preparation and Filing. Avalara will prepare Returns for Customer in the Filing Jurisdictions. Avalara will prepare and file the Return for those jurisdictions for which Avalara and Customer have agreed Avalara will file. Each standard sales and use tax return filing or Non-Standard Form (defined below) prepared for one jurisdiction for one filing period will count as one “Return.”
b. Filing.For those Filing Jurisdictions for which Avalara and Customer have agreed to file, if Customer timely transmits to Avalara all Tax Data before the Tax Liability Approval Deadline, Avalara will remit Customer’s Return(s) by the applicable filing deadline. Avalara may begin filing Returns as soon as Customer approves the related Tax Liability.
c. Funding. Avalara shall not provide funds to pay the Taxes. For those Filing Jurisdictions for which Avalara and Customer have agreed to file, if Tax Funds are not timely available to Avalara, Avalara will remit the Return(s) without payment.
i. Avalara will draw upon the Bank Account to pay the Taxes. Typically, these draws occur between the 11th and 14th day of the month, but may occur without notice at any time after the Tax Liability is approved.
ii. Each month, if applicable, Avalara will draw upon the Bank Account to pay Avalara Returns fees due.
iii. Avalara shall hold the Tax Funds in a trust account prior to disbursement to the applicable Filing Jurisdiction. Avalara holds all Tax Funds in trust for the benefit of the applicable Filing Jurisdiction and shall not comingle the Tax Funds with its general funds, but may comingle with funds held in trust on behalf of other Avalara customers.
4. Notice Management. Customer will receive all notices relating to Customer’s Returns directly from Filing Jurisdictions. Customer shall immediately and no later than 10 business days after the date of the notice electronically deliver to Avalara any notice from a Filing Jurisdiction. Such notice must be sent to firstname.lastname@example.org. Avalara will respond to notices for Returns and Taxes remitted by Avalara but may delay response or not to respond to notices received more than 10 business days after the date of the notice or, at Avalara’s sole discretion, to charge an additional fee to expedite the notice response. Customer will be responsible for responding to, or otherwise addressing, all other notices.
5. Extractors. For Customers who purchase Extractors, fees for each Extractor are based on the number of Extractor Transactions purchased for use in the Extractor by Customer. An “Extractor Transaction” is any record that is entered, uploaded, or otherwise recorded in the Service by Customer using an Extractor. Records include, for example, committed sales invoices, purchase invoices, inventory transfer invoices, return invoices, and committed e-commerce shopping carts. Each such record will count as one Extractor Transaction for purposes of calculating usage of the Extractor, as will each subsequent alteration of the record.
6. Returns Guarantee. Avalara provides a guarantee of the timeliness of Returns prepared and filed by Avalara Returns (the “Returns Guarantee”) under the following terms:
a. If a Customer suffers a notice of late filing, failure to file, or a failure to remit Taxes that results in financial loss due solely to Avalara’s failure to timely prepare and file a Return it was obligated to file or timely remit Taxes it was obligated to remit (an “Avalara Error”), Avalara will pay Customer the lesser of either: (i) the amount of the penalties and interest that directly result from the Avalara Error, or (ii) the amount of the Avalara Returns fees paid by Customer during the twelve months preceding the final assessment of penalties and/or interest for the Avalara Error.
b. The following limitations apply to this guarantee:
ii. Customer must not have requested changes to Customer’s Tax Liability after the Tax Liability Approval Deadline.
iii. Customer must promptly forward any notices and relevant information from taxing authorities within 10 days of the date of the notice.
iv. Customer must assist Avalara in challenging the taxing authority findings if appropriate in Avalara’s sole discretion.
v. Customer must assist Avalara’s efforts to abate or reduce the amount of penalties and/or interest imposed by the Filing Jurisdiction.
c. For purposes of calculating the amount of the Service fees paid that are eligible for the guarantee payment, the amount will be the fees actually paid by Customer to Avalara for Avalara Returns, and the time period will be the 365 days preceding the final assessment of penalties and/or interest after all appeals and abatement options have been exhausted.
d. In the event that (i) Customer ultimately settles with the Filing Jurisdiction for less than the full amount claimed by that Filing Jurisdiction, (ii) the audit implicates other issues in addition to the alleged Avalara Error, and (iii) the settlement does not specifically apportion the settlement amounts between the audit issues, the amount to be paid by Avalara under this Returns Guarantee will be the percentage of the settlement amount equal to the percentage of the entire settled claim (as such claim existed at the time of settlement) related to the alleged Avalara Error.
e. Avalara will make the guarantee payment within 30 days of the date that all administrative appeals are exhausted. Avalara may also, in its sole discretion, make the payment at an earlier date, in which case, Avalara’s obligations to continue to contest the Avalara Error will cease on the date of the payment.
f. Customer must have a current Avalara Returns subscription in good standing to be eligible to receive payment under this Returns Guarantee.
7. Fees. Customer agrees to pay fees for Avalara Returns based on Customer’s subscription plan and usage of the Service. Customer shall participate in Avalara’s automatic payment option for the Avalara Returns and either authorizes Avalara to draw from the Bank Account by ACH to pay Avalara Returns fees or designates another automatic payment method for Avalara Returns fees.
a. Per-Return Fees. The per-Return fee specified in Customer’s subscription plan is based on Customer’s estimated annual usage. Avalara reserves the right to adjust Customer’s per-Return fee at the beginning of any Renewal Subscription Term if the actual number of Returns prepared during the Subscription Term is fewer than the minimum number included in Customer’s Avalara Returns plan level. For example, if Customer’s Avalara Returns plan requires Customer to file at least 361 Returns each year, but Customer only files 100 Returns in a given year, then, effective upon the start of any Renewal Subscription Term, Avalara may adjust the per-form fee charged to Customer to the then-applicable per-Return fee for the Avalara Returns plan level that pertains to filing 100 Returns per year.
b. Minimum Monthly Fee. If Customer has purchased a subscription plan with a minimum number of annual Returns required, Avalara reserves the right to begin billing Customer a monthly minimum Avalara Returns fee (“Minimum Returns Fee”) if Customer has not provided to Avalara the Onboarding Requirements within 90 days following the Effective Date (“Avalara Returns Commencement Deadline”). Customer’s Minimum Returns Fee is calculated using the lowest number of Returns required to be filed under Customer’s subscription multiplied by the per-Return fee under the plan, divided by 12. By way of illustration and not limitation, if Customer has not filed a Return by the Avalara Returns Commencement Deadline and Customer is required to file at least 13 Returns each year with a per-form fee of $54, then Avalara will charge Customer’s payment information on file a $59 fee in the calendar month following the Avalara Returns Commencement Deadline and for each month thereafter until Customer completes the Onboarding Requirements. The foregoing monthly fee is calculated as follows: (13 x $54)/12). Avalara will stop charging Customer the Minimum Returns Fee when Customer completes the Onboarding Requirements and begins filing Returns.
c. Avalara Cancellation Option. If Customer has not begun filing Returns by the Avalara Returns Commencement Deadline, Avalara reserves the right to cancel Customer’s Avalara Returns subscription and retain all prepaid fees for the cancelled Service.
d. Overage Charge. If Customer exceeds Customer’s Avalara Returns subscription purchased and Customer utilizes Avalara Returns without upgrading to a higher tier, Customer will be charged for any additional Returns at the per-Return price associated with Customer’s purchased subscription for the then-current term.
e. Non-Standard Forms. If Customer requests (i) a form that is not offered by Avalara as a standard sales and use tax return; or (ii) a standard sales and use tax return that requires non-standard modifications to the standard sale and use tax return form (each a “Non-Standard Form”), Customer shall pay the per-hour rate for the Non-Standard Form in 1/4th hour increments (one quarter hour minimum per Non-Standard Form).
8. Compliance with NACHA Operating Rules. The funding process described in Section 3(c) above may be subject to the Operating Rules of NACHA, the organization that regulates the ACH network in the United States.
a. To the extent that Customer’s funding is governed by the NACHA Operation Rules, Customer specifically agrees to the following NACHA requirements:
i. Customer will comply with all applicable requirements under the then-current version of the NACHA Operating Rules;
ii. Customer authorizes Avalara to originate the funding requests described in Section 3(c) above;
iii. Customer will comply with the laws of the United States in providing such funding;
b. In addition to any other applicable termination rights, Avalara may terminate this agreement for Customer’s non-compliance with the NACHA Operating Rules if such breach or non-compliance is not cured within 10 days of Avalara first notifying Customer of its non-compliance;
c. Avalara shall have the right to audit Customer’s funding process, at a time and location mutually agreeable to both Customer and Avalara, to ensure compliance with the NACHA Operating Rules and this Agreement.