Statement of Work for Voluntary Compliance Services

Effective as of May 1, 2018

This Statement of Work (“SOW”) describes the Professional Services provided to Customer by Avalara. This SOW is in addition to and incorporates by reference the Avalara Professional Terms and Conditions located at www.avalara.com/ps-terms (“Terms”). Any capitalized terms used in this SOW and not defined have the meanings given in the Terms.

1.  Definitions.

AvaTax” means Avalara’s AvaTax Service for calculating transactional taxes on the sale of goods and services, including sales, use, and value added taxes.

Avalara Returns” means Avalara’s Service for compliance, preparation, and management of sales and use tax returns, treasury, remittance, and notice management.

“CertCapture” means Avalara’s CertCapture Service for exemption certificate storage and management.

Order Document” means a Sales Order, SOW, or other document used to purchase Services from Avalara.

Sales Order” means Avalara’s sales order form that describes the Services, Avalara Professional Services, fees, support plans, Expenses and any special terms for using the Services that Customer has ordered.

Services” means the Avalara service offerings to which Customer subscribes, as specified in the applicable Order Document.

2.  Voluntary Disclosure Agreement. For Customers who have purchased a “Voluntary Disclosure Agreement,” Avalara will assist Customer with compliance options for non-filers, including formal and informal voluntary disclosure programs, offered by the applicable taxing jurisdictions.

a.  Customer Obligations.

i.  Customer will answer Avalara’s questionnaire requesting pertinent information related to the voluntary disclosure program registration process, including ownership information, historical or anticipated start date, and estimated taxable sales.  Customer will provide any additional information Avalara may request.

ii.  Customer will provide any historical transaction source data requested and Customer’s tax policies regarding taxation of relevant transactions.  Customer will identify any Customer-related exemptions that Customer chooses to apply.

b.  Avalara Obligations. Based on the information and materials provided by Customer, Avalara will provide the following:

i.  Avalara will work with Customer to complete the formal or informal voluntary disclosure program application(s), with the preparation of self-audits as required;  Avalara will submit any voluntary disclosure program applications to the taxing jurisdiction on Customer’s behalf;

ii.  Avalara will submit any voluntary disclosure program applications to the taxing jurisdiction on Customer’s behalf;

iii.  Avalara will serve as the primary liaison between Customer and the taxing authority;

iv.  Avalara will review Customer’s business activities and tax policies as they relate to the self-audit process, including tax categorization for products and services, tax type assignment, and customer exemption status;

v.  Avalara will work with Customer to prepare the self-audit package in the required format, including preparation of historical tax returns, tax liability worksheets, and requisite tax reporting information;

vi.  Avalara will coordinate any additional information requests from the taxing authority;

vii. Avalara will prepare a penalty relief request for Customer’s review and approval and then submit it to the taxing authority;

viii. Avalara will re-process up to no more than 50,000 of Customer’s historical transactions in Avalara’s internal AvaTax account to calculate the correct amount of tax due.  Avalara will segregate the amounts due to each taxing jurisdiction (including all applicable local taxing authorities).  These amounts will be used for tax reporting under the self-audit;

ix.  If Customer does not qualify for the jurisdiction’s voluntary disclosure program, Avalara will pursue an alternate course of action such as Historical Registration, Customer Tax Recovery, or another Avalara service, which will be under a separate Order Document if necessary.

3.  Historical Registration. For Customers who have purchased “Historical Registration,” Avalara will provide tax registration services for the jurisdictions set forth in an attachment to Customer’s Order Document.  Avalara will assist Customer in registering retroactively for sales and use tax (or the equivalent transaction tax) in each of these taxing jurisdictions.  Avalara will prepare historical sales and use tax returns and penalty abatement requests as needed for each taxing authority.

a.  Customer Obligations.

i.  Customer must have an AvaTax account in good standing. 

1)  Customer will load Customer’s historical transaction data into AvaTax for each reporting period and taxing jurisdiction, unless the Sales Order also includes the Data Transformation Services set forth below in Section 8.

2)  For an additional fee, Avalara can assist Customer with the upload of Customer’s historical transaction data into AvaTax.  Customer can opt into this service at any time during the project through a written communication with the designated project manager.

ii.  Customer will answer Avalara’s questionnaire requesting pertinent information related to the registration process, including ownership information, historical or anticipated start date, and estimated taxable sales. Customer will provide any additional information Avalara may request.

iii.  Customer will review, approve, and sign the completed tax registration applications and historical sales and use tax returns (or figures). 

iv.  Customer will submit the tax registration applications to the taxing authorities, along with any supporting documentation.

v.  Customer will receive notices related to sales and use tax license number and filing frequency.  Customer shall forward all such notices to Avalara for assistance.

vi.  Customer will receive other notices, including notices requesting payment of any taxes, fees, fines, interest and/or penalties directly from the tax authorities.  Customer shall respond to all such notices and remit any payment owing.

vii.  Customer must submit to Avalara any notice within received from the taxing authorities imposing penalties and interest on the late filings within 30 days of notice date. 

b.  Avalara Obligations. Based on the information and materials provided by Customer, Avalara will provide the following:

i.   Avalara will prepare the appropriate sales and use tax registration applications to retroactively register Customer back to the nexus start date specified by Customer;

ii.  Avalara will prepare and submit the appropriate sales and use tax returns for these historical reporting periods detailing Customer’s historical sales.  In some cases and where approved by the taxing authority, Avalara may prepare spreadsheets in lieu of actual tax returns detailing the historical sales; and

iii.  Upon timely receipt of notices from Customer as set forth above in Section 3(a)(vi), Avalara will prepare and submit a penalty abatement request on Customer’s behalf to limit any penalties that may be imposed for late registration, tax return filings, and payments.  Submission of such requests is Avalara’s final step in this process, after which Avalara’s role in this effort will be considered complete.

c.  Exclusions.  The decision to register for tax reporting is the sole responsibility of Customer.  There are a number of considerations impacted by this decision. The following services are excluded from this engagement:

i.  Management of notices from the taxing authorities set forth in Section 3(a)(vi);

ii.  Contacting the jurisdiction(s) regarding the status of Customer’s registration application or historical tax returns, once submitted;

iii.  Updates to the Customer’s filing calendar in Avalara Returns to activate tax reporting.  Upon receipt of Customer’s approved tax registration application, Avalara will issue a license or permit by the taxing authorities with Customer’s tax registration number, initial filing frequency, and prepayment requirements (if any).  Customer shall update the filing calendar in Avalara Returns.

4.  Customer Tax Recovery. For Customers who have purchased “Customer Tax Recovery,” Avalara will assist with a tax recovery effort from Customer’s customers. Customer understands that Customer Tax Recovery Services may not be successful.

a.  Contacting Customers’ Customers. Some of Customer’s customers may have already paid sales or use tax due on historical transactions directly to the taxing authorities (as self-reported use tax or through an audit) or may be exempt.  In some cases, these customers may also be willing to reimburse Customer for the unpaid tax to be remitted to the taxing authority.  Avalara will assist in contacting these customers on Customer’s behalf.

b.  Customer Tax Recovery Report. Based on the information provided by Customer, Avalara will prepare a report detailing findings, including procurement of tax exemptions, resale certificates, direct pay permits, and statements of use tax paid. Avalara will also provide any gathered documentation to Customer at the end of the project through CertCapture or other means as determined to be appropriate by Avalara. 

c.  Fees.  This service is hour-based; the number of consulting hours available to Customer will be set forth in the Sales Order. 

5.  Address Validation. For Customers who have purchased “Address Validation,” Avalara will validate addresses provided by Customer.

a.  Customer Data. Customer will provide Avalara with a .csv data file or Microsoft Excel spreadsheet containing the address details. The data provided must contain the following key data elements: a unique record identifier (e.g., a customer code), street address lines, city, state or province, post code (5 digit or 9 digit), and country code (2 or 3 digit).

b.  Address Validation Report. Avalara will provide a .csv data file or Microsoft Excel spreadsheet back to Customer with the original address details along with the re-formatted and corrected addresses in USPS or Canada Post format. Incomplete or inconsistent address records may fail the validation process. Any addresses that cannot be validated will be returned to Customer in the original format along with the associated error messages. Customer is responsible for correcting any addresses that do not validate.

6.  Express Tax Exposure Analysis. For Customers who have purchased an “Express Tax Exposure Analysis,” Avalara will perform an overall high-level assessment of the potential sales and use tax exposure created by Customer in various taxing jurisdictions. 

a.  Avalara will work with Customer to obtain historical transaction data and relevant tax exemption information and create a “Tax Exposure Express Report” to assist Customer with decisions regarding sales and use tax compliance.

b.  The Tax Exposure Express Report will detail findings and recommendations for each state.  The Tax Exposure Express Report may also identify some key characteristics of each state, including the existence of a formal voluntary disclosure or amnesty program and expected limited-lookback periods.  These factors will assist Customer in deciding the order and manner in which to approach each taxing authority.  The Tax Exposure Express Report will utilize the current average tax rate for each state, include state-specific penalty rates, and will include up to one hour of tax code mapping services from Avalara. The Tax Exposure Express Report will include analysis for only one business entity. Customer will make the final decisions regarding if and how to register and report any historical transactions to each taxing authority.

7.  Standard Tax Exposure Analysis. For Customers who have purchased a “Standard Tax Exposure Analysis,” Avalara will perform an overall high-level assessment of the potential sales and use tax exposure created by Customer in various taxing jurisdictions. 

a.  Avalara will work with Customer to obtain historical transaction data and relevant tax exemption information, and re-process up to 50,000 transactions using Avalara’s internal AvaTax account.  Avalara will identify any potential limited lookback periods that might be available through amnesty or voluntary disclosure programs for each state.  Avalara will create a “Tax Exposure Standard Report” to assist Customer with decisions regarding sales and use tax compliance.

b.  The Tax Exposure Standard Report will detail findings and recommendations for each state (typically consolidated into classes with similar liabilities by state.)  The Tax Exposure Standard Report may also identify some key characteristics of each state, including the existence of a formal voluntary disclosure or amnesty program, expected limited-lookback periods, and state-specific penalty amounts.  These factors will assist Customer in deciding the order and manner in which to approach each taxing authority. The Tax Exposure Standard Report will use state-specific historic tax rates, state-specific penalty rates, and will include two hours of tax code mapping services from Avalara.  The Tax Exposure Standard Report will include analysis for only one business entity.  Customer will make the final decisions regarding if and how to register and report any historical transactions with each taxing authority.

8.  Data Transformation Services. For Customers who have purchased “Data Transformation Services,” Avalara will provide assistance in uploading historical transactions into Customer’s AvaTax account.  Avalara will convert Customer’s source data files into a format useable by AvaTax.

a.  AvaTax Import Process.

i.  Prior to importing any historical transaction data, Avalara will work with Customer to understand Customer’s tax policy and assist Customer is applying that policy to Customers’ AvaTax account.

ii.  Importation into AvaTax may result in tax recalculation, reallocation, and redetermination of tax sourcing, which may change the nature of posted transactions.  The posted transaction may have a different tax or situs applied than that of the original, native transaction.  These results could impact Customer’s tax liability in the applicable tax jurisdictions.

iii.  Some historical transactions may fail the import process, either in full or in part, due to incomplete or inconsistent data; for example, address components that are inconsistent with one another (city not belonging to an associated postal code) or incomplete (missing state) or inaccurate (invalid postal code). Transactions that fail the import process are isolated to a separate data file, which Avalara will provide to Customer for remediation.  Customer will address any transactions that fail the import process.

b.  Customer Obligations. Customer must have an existing, current AvaTax subscription at the time of any transaction import. Customer is solely responsible for the content and accuracy of the transaction data. Avalara is authorized to import Customer’s historical transactions for purposes of Data Transformation Services.

c.  Fees.  This service is hour-based; the number of consulting hours available to Customer will be set forth in the Sales Order.

9.  One-Time Remittance. Customers who have purchased “One-Time Remittance” will receive Avalara’s assistance in preparing and filing returns for unremitted sales and use taxes in the applicable jurisdictions. 

a.  Avalara Obligations.

i.  Avalara will prepare a one-time prior period sales and use tax return for the jurisdictions set forth in an attachment to Customer’s Order Document.  Avalara will prepare the return(s) based on transaction data available through Customer’s AvaTax account.

ii.  Avalara will prepare a cover letter to each taxing jurisdiction describing the reason for the prior period return submission and requesting an abatement of related penalties if applicable.  Avalara will forward the completed package to Customer for final review, approval, signature, and mailing.

iii.  Avalara will assist Customer with any notices related to this tax remittance project for a period of six months from submission.

iv.  Avalara will provide one follow-up per jurisdiction and update Customer on the penalty abatement request.

b.  Customer Obligations.

i.  Customer will review and approve the tax liability amounts to be reported detailed in tax liability worksheet.

ii.  Customer will review, approve, sign, and mail the prior period sales and use tax returns.  Customer will fund tax liabilities and directly remit any taxes owed to the applicable tax jurisdiction. 

c.  Dependencies.  Avalara will begin work at a mutually agreed time upon signature of the Order Document. Completion time for One-Time Remittance services varies widely based on the timeliness and completeness of information provided by Customer and the responsiveness of the jurisdictions.

10.  Professional Fees. Customer will pay all fees specified in the Order Document. Payment obligations are non-cancelable, and fees paid are nonrefundable.

11.  Extension of Scope. This SOW applies only to the specific purchases made in the Order Document. Any change in the scope of this SOW or undue delay by Customer in meeting its obligations under this SOW may require an extension in the schedule, an adjustment in the fees and expenses, or an adjustment in the work Avalara is to perform, which will be enumerated in an additional Order Document signed by the Customer.

12.  Assumptions.

a.  Customer represents and warrants that all information and documentation provided to Avalara is true and accurate.

b.  Although Avalara will factor in the types of products and services Customer sells during nexus review and analysis, the scope of this engagement does not include the determination of the taxability of any Customer products or services.

c.  The scope of this SOW encompasses state-level taxing jurisdictions that administer sales and use tax or an equivalent excise tax unless otherwise agreed upon; many states have locally administered taxing schemes that may be different from the state level.

d.  Customer may purchase sales and use tax nexus consulting services from Avalara. Customer should consult outside tax advisors regarding other tax concerns, such as state income or franchise tax nexus. Registering for sales and use tax collection and reporting can impact on federal, state, and other tax reporting requirements, all of which are outside the scope of this SOW.

e.  Customer is responsible for all sales and use tax decisions made and tax positions taken.

f.  If Customer fails to provide Avalara with any requested information to register Customer within 60 days of the date the Order Document was signed, Avalara may terminate the SOW by notifying Customer in writing.  Fees for such terminated services are not refundable.

g.  Avalara will begin performing the Professional Services within 30 days of Services Effective Date. The “Services Effective Date” is the date on which Avalara processes Customer’s signed Order Document.

h.  Avalara will use commercially reasonable efforts to provide consistent personnel for the duration of this SOW. However, Avalara may reassign personnel in its sole discretion.

i.  This SOW will expire one year after Services Effective Date. Any service outlined in this SOW and not used by Customer will expire at that time, and no fees will be refunded.

j.  Customer is solely responsible for all Certificate management policy decisions.

k.  If Customer engages a third party to provide services, Customer will be responsible for all third-party contracts, costs, and projects including management of all third-party personnel and delivery issues.

l.  If Customer terminates this SOW without cause before the Professional Services are completed, Customer shall pay the full cost of the Professional Services set forth in the Order Document.

m.  All work will be performed remotely during Avalara business hours; Avalara will not travel to Customer’s premises under this SOW.