Avalara Formally Launches Streamlined Sales Tax Project.

Certified Services Provider Avalara Processes First U.S. Transaction Under New Sales Tax Compliance Program

BAINBRIDGE ISLAND, Wash. -- After a demanding six-year process that involved the efforts of thousands of legislators and state regulators, the national Streamlined Sales Tax (SST) project has finally gone live. After a ninety-day series of proof-of-concept test transactions -- a "beta" test that went off without a hitch -- Avalara (http://www.avalara.com), one of SST's two national Certified Service Providers, has just processed the first SST sales tax transaction anywhere in the country. "The SST program has been in the works since 2000," explained Rory Rawlings, Avalara's founder and Chief Tax Automation Officer, "and it has taken all this time for the states to align their tax codes, select Certified Service Providers, and to bring their program online."

SST officials were proud to see their project finally leave the ground. Scott Peterson, Executive Director, said, "Hundreds of committed executives and legislators in 42 states and the District of Columbia have worked for six years to make this moment a reality. Thanks to Avalara's ability to quickly put their system into operation, the entire SST system is now working as planned. Through this program, individual corporations will be able to fully and accurately meet their legitimate sales tax obligations, and the states will begin to recover some of the estimated $20 billion dollars in lost tax revenue that previous systems had been unable to identify and collect.

"This is a win-win situation for the states," Peterson explained, "and for the thousands of ethical companies which seek only to obey the law -- and this is also the harbinger of great things to come. We in the SST program thank Avalara for their dedication and hard work -- and for the commitment that has made this day possible."

During the proof-of-concept phase, the first fully automated SST transaction anywhere in the United States was recorded by a North Carolina-based home renovation supplier -- a purchase for $76.85, with a collected sales tax of $5.38. Since that initial transaction, 13 firms participated in the beta test, during which literally thousands of other retail sales transactions occurred, completely validating Avalara's fully-automated Sales Tax Management System (STMS). That automated approach to STMS is at the heart of Avalara's SST support system.

"This STMS automated sales tax management system, which Avalara launched into the marketplace in June, 2004, is virtually identical to the system adopted by the consortium of Streamlined Sales Tax states," Rawlings explained. At its launch, in addition to the 13 beta-test participants, between 35 and 50 firms are in the queue to begin participating in the SST program, Rawlings noted, with others being added to the participant pool on a daily basis.

About SST: Forty-four states and the District of Columbia are participants in SST. To date, 19 states have taken the steps needed to align their sales tax standards, a necessary pre-condition of active participation, and two more will join on January 1, 2007. Within the past few months, the SST states designated three Certified Service Providers (CSPs) -- initially, 13 firms responded to an RFP; this was winnowed down to seven, then three -- Avalara, Exactor and Taxware have signed on as active CSPs. Avalara's program went live later in 2006 -- Taxware is expected to go live with it's first active SST clients later in the summer of 2006. Participating firms pay nothing for SST sales tax services provided by CSPs; in addition, they are given amnesty for any past sales tax liability and are also free from risk of a sales tax audit from any of the participating SST states.

About AvaTax[TM]

An SMB market-leading, Web-service-based sales tax solution, AvaTax instantly and accurately calculates sales tax for clients in any of the more than 8,000 taxing jurisdictions in North America; provides detailed, real-time reporting; and automatically generates pre-populated sales tax returns. Currently, more than 2,600 licensed AvaTax users run an average of 5 sales tax calculation transactions through Avalara's sales tax engine every second.

AvaTax comes integrated with SMB financial applications serving more businesses than any other solution on the market today, including Microsoft Dynamics[TM] GP, Microsoft Dynamics[TM] NAV, Intuit's QuickBooks[R], Sage Software's Sage MAS 90 ERP, Sage MAS 200 ERP, Sage MAS 500 ERP, Sage Accpac ERP and Epicor's iScala. Additionally, with AvaTax SDK[TM], developers can integrate Avalara's sales tax Web service with any e-commerce, third-party or custom-build solution with use of a comprehensive Software Developer's Kit (SDK).

About Avalara

Headquartered on Bainbridge Island near Seattle, Washington, Avalara is changing the sales tax landscape by delivering innovative and affordable solutions to small and mid-sized businesses. Avalara's mission is to transform the sales tax compliance process by creating cost-effective, state-of-the-art solutions. Avalara does so through integrated, on-demand, Web-based services that provide transparent transactions, accurate tax compliance, painless administration and effortless reporting.

White Paper Available

Avalara commissioned from the Bay Street Group a comprehensive white paper that provides an in-depth exploration of SST and STMS -- this white paper is available online at: http://avalara.com/index.cfm/page/STMS.