eCommerce and Startup Tax Compliance, with Meg Higgins of Avalara  | Soar Payments LLC
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Meg Higgins of Avalara; Tax Compliance

eCommerce and Startup Tax Compliance, with Meg Higgins of Avalara 

Tax season is here! This episode we’re joined by Meg Higgins, VP of Global Business Development at Avalara, who talks to us all about Tax Compliance and Tax Laws, particularly with an eCommerce and FinTech focus. If you’re a Fintech or eCommerce entrepreneur and want to learn how to streamline your tax compliance, or what traps to watch out for, this episode is for you.

Payments & Fintech Insights In This Episode

  • An overview of tax compliance for eCommerce SMBs and common pitfalls to watch out for, from someone who sees tens of thousands of SMBs tax situations a year.
  • Meg Higgins walks us through the products and services that Avalara offers to SMBs 
  • Avalara’s database content and how incredibly large and precise it is.
  • How Avalara is adapting to new currencies and technologies to keep SMBs in tax compliance.

Featured on the Show

Episode Transcript

Meg: It is at the foundation of what we do, making sure that we are constantly keeping up to date with all the changing regulations. We have over 100 tax people in our organisation that that’s all they do is just build our content and keep our content database updated. They get direct updates from the different jurisdictions. They go out to different subscription services like LexisNexis, and we have feedback from different compliance forums. I mean, it’s a lot of input aggregation that we grab. We work very hard at making it as accurate as possible.

Jacob: Welcome to PayPod, the Payments Industry podcast. Each week, we’ll bring you in-depth conversations with leaders who are shaping the payments and fintech world from payment processing to risk management and from new technology to entirely new payment types. If you want to know what’s happening in the world of fintech and payments, you’re in the right place. Hello, everyone. Welcome to PayPod. I’m your host, Jacob Hollabaugh. And today on the show, we are talking tax compliance, an incredibly important component of the payments process and one that is certainly top of mind this time of year given tax season is in full swing. Joining me to explore this topic is Meg Higgins, the vice president of global Business development at Avalara, where they are building cloud based tax compliance solutions to handle every transaction in the world. Meg, welcome to the show. Thanks for being here.

Meg: Thanks so much, Jacob. Great to be here. Appreciate you having me.

Jacob: Yes, thank you for the time and all the knowledge and wisdom I’m sure you’re about to share with us. Before we get started too far, can we first just get a lay of the land, so to speak? What does sales tax compliance even look like at a high level, Or SMBs supposed to be charging different sales tax rates based on the location of the buyer, the seller, the type of product sold? Give us kind of just a high level overview of how the sales tax world is set up.

Meg: Sure. It’s complex. So we’ll start with that. There are over 13,000 sales in tax jurisdictions in the US alone, and every jurisdiction has the ability to change different rates and rules. And that’s what leads to a lot of the complexities. So in recent years it’s just gotten overwhelmingly more complex, which is part of why many businesses have come to us and said, I can’t manage this manually. If you go back even to 2018, the Supreme Court decision had in essence, said South Dakota and Wayfair, they had said that businesses just because you have a physical presence doesn’t mean that you don’t have to collect sales tax. And so that’s what really led to this concept of economic nexus laws. So today, 45 states have these sales tax economic nexus laws, which are all vastly different based upon the state that you’re in. Et cetera. And they all have different rules. So as an example, my home state of Connecticut businesses that have $100,000 in sales and or 200 transactions in the state have economic nexus obligations. However, if you go into New York, it’s $500,000 in sales and 100 transactions to trigger an obligation. So you have to understand as a small business, if you’re operating a digital business, if you’re operating in any of these different locations, you have to understand these rules and all the different thresholds around them, which obviously is tricky. Tricky as to when you trigger a tax obligation. And tricky is to be able to keep all the data aggregated in a way that allows you to to understand that.

Meg: Now there’s also another one here for many small businesses around marketplaces. And so marketplaces have rolled out marketplace Facilitation law, which removes the burden of the seller to the marketplace platform. And that you would think, okay, great, one less thing I have to worry about, but as a business, you still have to account for all those transactions. So as I just described the thresholds, you might not physically have to remit the money and you might not necessarily be responsible for the tax return, but you have to account for that sale and that transaction in your tax record keeping. And so it’s tripped a lot of people up because you don’t necessarily have the tax obligation directly, but you still have to account for all of those sales because of this nexus ruling. So in summary, I would say businesses have really gotten into the point where everyone is digital these days. You are omnichannel inevitably, so you’ve got a physical presence. You might have a participation in a marketplace, etcetera. And when you aggregate all of that up, being able to understand what you need to do by each state, that is where many businesses have just come to us and said, okay, I don’t know which products are taxable, I don’t know which state I have to pay taxes or collect taxes with. And so, you know, trying to do that independently has created a lot of frustration and concern for businesses.

Jacob: And with that big Supreme Court decision, obviously that’s kind of a watershed moment to just add both the that they have to now do these things and all these layers of complexity. Was there any sort of time frame put in place or like grandfathered in sort of how quickly businesses had to get on board and figure this out? Or was it the moment that happened? It was like, okay, starting right now, this moment, you’ve got to be have it figured out. Was there any leeway on that?

Meg: Good question. I mean, it took some time to get adoption and then enforcement of that. But I would say it’s now well enforced. And as you can appreciate with COVID, states are looking for more tax revenue. Right? They’re looking to fill some of these holes that they have. And this is an easy one for them. They’re like, wow, if I can just collect more tax that’s owed to me, I can now find it’s found money for them. And so the regulation and the enforcement is getting tighter, unfortunately, for all of us that have tax obligations around here.

Jacob: Yeah. And of course, from the business side, it makes plenty of sense that as the world has transitioned to this digital space, that we weren’t just going to not have to pay taxes on anything again because we no longer bought almost anything in. Person in the store in our town. So it is the natural transition to figure out where does that actually go? Who are you selling to? Where are you buying from? So, it makes sense.

Meg: You know, I still see because I do quite a bit of shopping online and I still see when retailers aren’t charging for tax. And I cringe because I’m thinking, okay, I like this as a consumer because I don’t have to pay tax on this transaction. But as somebody in the tax business, I know that they aren’t collecting the tax dollars right now. And so that’s just going to leave a downstream burden for them. And so many businesses really think they’re doing it right. And then inevitably they have this consequence that all of a sudden they realize, oh, geez, I haven’t been collecting tax either correctly or at all, and now I have to come up with some reconciliation as to how to make that right, because they don’t forget. I mean, that’s the one thing about the tax people. they don’t forget. So they want their money at some point. So, yeah, you know, good for the consumer, but not good for the business, of course.

Jacob: And two follow ups on that. The first thing is just that is also can be the death knell of a lot of the smaller the businesses that maybe don’t have the resources available. When that big burden pops up that they didn’t know was coming or weren’t accounting for, and suddenly that for smaller businesses could be the moment where we have no avenue around this. For bigger companies, it’s still a headache, but maybe they have the funding or the savings in other ways they could get through that. But I wonder what percentage would you say of businesses do you think are currently following these rules or getting this right? And what are if you could list a few of the consequences maybe for the ones that have been slower to adapt or are not yet adapted to where they need to be on this front?

Meg: Yeah. So we had commissioned a study in 2022 and we asked that exact question. And 74% of small businesses believe that they’ve implemented all the changes they need to be compliant, stemming from Wayfair or whatever obligations they might have, which was a really high number and does not correlate with our experience talking to businesses. And I think that is part of the root cause of the issue that we have, which is people are just assuming they got it right. And what we find is many businesses come to us really in a moment of crisis because they’ve figured out too late that they haven’t been doing it correctly. And so now they have a tax obligation or now they have some type of situation here that either as a result of an audit, as a result of something happening to their business, and that’s never a good place to be in, because then you really are under a lot of duress and stress and so forth. And so even though 74% believe they’re doing it right, our data and our experience tells us that’s not necessarily the case. However, large enterprises, obviously, they have large teams, they have experts, they have outsourced accounting, etcetera. And so they have much better alignment to those rules. And the consequences, obviously, of being inaccurate are much greater for those large enterprise businesses. So the consequences for small business is that, one, either you’re overcharging, you’re undercharging tax. And so if you’re overcharging, if you’re in an e-commerce business, that could lead to shopping cart abandonment, lower sales, etcetera, because people are seeing, you know, excessive costs and fees in their checkout line item. If you’re under charging, great. But at some point the bill is going to rack up that you have to make that variance true up. And so that will likely come out of your own pocket because where else are you going to get it from? You can’t go back to the consumer a year later and say, Whoops, I undercharged you on tax. That consumer is long gone.

Jacob: Hey, remember that coat that you love? I actually need an additional $5 on that. Just totally had it wrong.

Meg: So yeah yeah you know it was funny, I bought a dining room set last year and they didn’t charge tax and I was like, Wow, like that. I mean, it was a lot of money that I was thinking I really they should have been charging me tax. And I went so far as to say, you know, I’m in the tax business. Are you guys sure you’re not supposed to check? No, no, no. We don’t charge tax. I said, okay. I was happy, but I’m thinking that was several hundred dollars that they are going to have to deal with at some point.

Jacob: Yeah, that was my other follow up earlier. Is, is that your entire sales and marketing strategy is just everyone at the company, when you’re buying things you’re noticing like this doesn’t seem right. Hey, can you reach out to this company that I just bought this dining room set from?

Meg: Yeah, it is a good tactic actually for us to spot that. I should send those leads over to my sales team whenever I’m checking out. But I actually love it as a consumer, so I hope they don’t figure it out. But I’m like, Oh my gosh, I’m such a moral obligation here. I got to help these businesses.

Jacob: Yeah, of course. Well, let’s now get specifically then to your company. Avalara Can you give an overview of the tax compliance solutions that you offer?

Meg: Yeah. Yeah. So, Avalara, we’ve been in business a long time and we were founded with the premise that we really want to deliver solutions. There was only solutions to the market for enterprise platforms and enterprise customers, which was all on prem at the time. And so our founder had had a belief that we should make tax accessible to all businesses and deliver it through a cloud and. And deliver it through the, you know, a web based experience. And at the time, that was very disruptive because the Internet was still kind of getting to its maturity level. So we started with sales and use tax, and now we have a broad base of cloud based tax compliance solutions. So everything that you need, there’s core components, you know, having a tax requirements. So you need things like I got to get registered in the state so I can actually be eligible and legally registered to collect tax in that state in my business and so forth. Then you have the whole application of collecting tax and understanding where your tax liabilities are and the tax codes, etcetera. And then lastly, filing returns. So you’ve now you’re registered, now you’re collecting tax, and now you got to figure out how to remit the money to those states and file the applicable returns.

Meg: And so that’s sort of our core tax products and services. And then we have a whole bunch of ancillary services that like exemption certificates. So if you’re a B2B business or if you’re a nonprofit, you’re tax exempt, but you got to store all of those certificates. So we have an exemption service. We do cross border and then a new service that’s getting a lot of demand as a result of mandates globally is our e-invoicing technology. And so what that does essentially is starting in Europe and Brazil and other countries, but the governments are mandating that at the time of tax collection and tax calculation that you are sending those invoices to them real time. And so the government is now moving way upstream as opposed to waiting for you to complete your transaction and then remit to them on a quarterly, monthly or annual basis. They want their tax dollars real time. So that’s going to be a big shift for all of us.

Jacob: Yeah, wonderful. And you hinted at it there. I believe you know the smaller side, but are your services targeted towards specific size of companies or specific industries in particular or kind of across the spectrum?

Meg: We have a broad range. We have a very large partner network, which is my domain here specifically, but we have over 1200 partner integrations. We have common applications like ERP and e-commerce and point of sale and subscription billing platforms. I mean, wherever the invoice generally takes place or the checkout takes place, that’s where the tax transaction generally will come into play. But we service businesses of all sizes, so we have thousands and thousands of merchants that we work with and then we have thousands of enterprise merchants as well. So it really is not segment specific, but it’s really more application specific.

Jacob: Makes sense. How does Avalara technology ensure that it’s accurate tax calculations at that point of sale or during the transaction process? Where are you pulling your data from? How often is that updated? How are you kind of ensuring that your product is to have it be accurate? How are you able to ensure that?

Meg: Yeah, it is. At the foundation of what we do is making sure that we are constantly keeping up to date with all the changing regulations. So I mentioned earlier, you know, we’ve 13,000 tax jurisdictions in the US alone, so now take that as a multiple globally, right? And we have over 100 tax people in our organization that that’s all they do is just build our content and keep our content database updated. That’s at the heart of everything. All of our calculations are leveraging this content database. So over 100 people that are keeping the content updated and they do things like they are reading all the tax laws and the updates. They get direct updates from the different jurisdictions. They go out to different subscription services like LexisNexis, and we have feedback from different compliance forums. I mean, it’s a lot of input aggregation that we grab and then we ultimately translate into our content database. And that content database is leveraged globally for all of our applications and we can’t ensure it’s always 100% right, because sometimes people don’t publish changes in real time and so forth. But we work very hard at making it as accurate as possible.

Jacob: Yeah, absolutely. Then let’s talk about the integration side of things. How does Avalara handle the integration of these solutions with the various ERP accounting, e-commerce point of sale systems that you’ve got to integrate with? What challenges have you encountered, if any, in ensuring that seamless compatibility with such a wide range of platforms?

Meg: So I mentioned earlier that we have about 1200 signed partner integrations and we add hundreds every year. You know, our partner Moat is very special and it’s at the heart of our business here. And so we’ve gotten really good actually at making standardizing our APIs, standardizing our documentation, standardizing our approach to having people integrate into our services and so forth. And so I wouldn’t necessarily call it seamless, but we don’t have to solve for ERP differently than we solve for other applications. So we have standardized protocols and all of our tech partners and our channel partners too, but our tech partners primarily really leverage that in an easy way. And then we have a whole partner services organization that supports them and that. As APIs change or as there’s edits and so forth that they can keep pace with those. But yeah, standardization has been key for us and just making sure that our partners are such an important part of our network and they don’t have to do a lot of heavy lifting other than just that initial integration, certainly.

Jacob: And I think I’m maybe I saw this on your site, but there was a developer corner kind of if a merchant whose current software doesn’t integrate right now, they’re not just out of luck, right? There’s a way for them to possibly help you build that integration for them if they are possibly using a platform that you haven’t worked with before.

Meg: Sure, you don’t have to go through a partner integration. We have a direct approach that that merchants can use directly. I would say that’s less and less really, because then you have to own maintenance of that integration, etcetera. And so most of our customers like to the tune of about 85% of our customers rely on a partner integration. But absolutely, if they, you know, particularly large merchants might come to us directly and just integrate the API. And last year we announced new APIs that have this low code approach. And so that is something that will continue to evolve and it’s called our Connector studio. And so customers can come to us and it’s not, you know, historically it was a 3 to 4 month effort for you to integrate into Avalara. And so our intention is to make that weeks versus months. And so that’s what these new APIs are, are really targeted to make it much more easier if you wanted to come and just integrate directly.

Jacob: Yeah, that’s awesome and that makes perfect sense. The larger companies that maybe would be doing a lot more internal versus having those partners would be maybe the only ones that are coming to you with. We’ve got a unique setup over here because we’ve done everything internal and need to do that again.

Meg: and marketplaces to almost all of our marketplace partners come to us and just integrate directly to our APIs. Yeah.

Jacob: So you mentioned a few times already that while things are pretty complex, that number still scares me. Both times you said it, of how many different jurisdictions and everything there are in the US, but you do work in internationally as well, and cross-border transactions are becoming more and more common the more digitized everything gets. How does Avalara help businesses navigate the complexities of the international tax regulations and compliance? Are you working pretty much globally now, or are there certain markets you are in or are not in or attempting to get into soon? Yeah.

Meg: Yeah. We have a global footprint and I think as it relates to international, cross-border is an area that we’ve been investing in significantly and cross border. I think at last sizing it was expected to be about a $2 trillion business this year alone. So cross border is an enormous opportunity for us and we have unique capabilities there that help facilitate transacting globally. So if you’re exporting out of the US or if you’re going from the UK into EMEA, et cetera, there are requirements. So those requirements could be I need to be able to have a HS code which allows for you to categorize what type of product you’re selling. It’s a global tariff system that you need to align to, and that HS code really feeds into the calculation around duties and taxes. Et cetera. That you’re going to have to pay when you import into these various markets. So that is some of the technology that we’ve rolled out in recent years and has been really essential to a lot of businesses that already have an international business and just need to be more accurate. So either you can charge it at the door, which is a pretty poor experience for you to say, okay, I’m going to buy from a UK merchant and then you get some large bill handed to you from your shipping carrier, which by the way, was very commonplace years ago. And what does that ultimately lead to? It leads to consumers saying, I don’t want it anymore. If I knew that it was going to be another 40 bucks, I don’t I wouldn’t have bought it. So forget it. So now you have this situation where the item is rejected and then it’s sitting in this returns facility. And so you as the merchant are just stuck, you’re out the money of the transaction. And then you’ve got to pay the money for it to come back. Right? So having that upfront transparency around cost by leveraging some of this technology has been really essential to a lot of businesses.

Jacob: Absolutely. And yeah, reducing that friction overall because it’s obviously the lost revenue is a big problem on its own. But when you compound that with now there’s all this other friction that’s added in of correcting and having three new tasks that have to be done for this transaction that is now lost revenue itself. It just all builds up really quickly. And to be able to solve that and still capture that sale is obviously going to be a huge boon over the long term.

Meg: And the good news is there’s all the tools and technology to make it easier. So I feel like we’re talking about a lot of the challenges, but I think the good news is there’s a lot of solutions. And so I hope that your listeners know that there’s there’s ways to make this work for your business. It doesn’t always have to be so hard.

Jacob: Yeah, absolutely. How does Avalara as technology leverage? AI and machine learning, which are the topic du jour of 2023. So far, everyone, regardless of industry, I think every episode of this podcast for the last little bit here and probably for the foreseeable future, we’ll likely bring this topic up regardless of what we’re actually discussing. But I wonder how, if at all, Avalara is leveraging AI machine learning to improve your accuracy or efficiency of the compliance solutions?

Meg: Yeah, for sure. And absolutely AI is the topic du jour and we’re no different as a tech company. You know, we use AI in a few different areas of the business. You know, as I was mentioning around Cross Border that that’s one application that’s heavily dependent on AI. So we consume some of the HS codes and the learning that we have around do the HS codes that we predict, are those the same ones that actually get cleared through customs as an example? So we have kind of a full round trip data flow around what we think the HS code is and the duties and taxes for a particular item and then what the shipping carrier and what customs actually said it was going to be. And so we get better when we train our engine to constantly get better because we have that full closed loop data flow between us. And so that’s one example of how we’re using AI. And we bought a company called Index last year where we aspire to be able to tag every single item in the world with an HS code or with some type of tax code, and that’s another AI initiative. And so for us to be able to get super smart around tax codes, you can’t do that manually. And so you really have to be able to say of all the SKUs in the entire world and all of the different products in the world, the variants of that, what are all those tax codes? And so that’s us just absorbing all the data and just getting really smart over time.

Jacob: Yeah, absolutely. And one of the other maybe the topic does your back of 2022 that’s cooled off a little now but is starting to resurface in the news as of late is digital currencies and blockchain technology and how much that may impact the entire tech space, FinTech space, certainly, and definitely the payments space with the digital currency possibly swapping in new currencies that people are using across borders and whatnot. What role does Avalara play in possibly helping manage in the future? The tax implications If some of these new payments, new types of transactions become more commonplace and more widespread?

Meg: Yeah, well, digital currencies and platforms have definitely captured a lot of attention. And the tax authorities are still evolving in terms of how they address those. So in 2022, 37 states introduced cryptocurrency legislation. So they are definitely catching on. Likewise, states like Washington, Pennsylvania put out guidance around taxability of NFTs in other areas like the metaverse. I think it’s still challenging for them to know how they should treat that. I think challenging for all of us, frankly. So how that’s all going to work. But in summary, we’re always a pioneer around how we try to stay in sync and thinking about tax automation for businesses. And so as these new technologies evolve and as these new digital currencies continue to get broader adoption, then then we’ll solve for them. And we already are with, you know, with the ones that have already passed legislation.

Jacob: Yeah. And I would imagine as much for you to adopt, like to create anything new, but simply most of what you have is adopted over when the governments or the legislators are starting to be able to label things more accordingly, then it’s pretty much just fitting the current systems you have to the new just a new currency. But ultimately it’s not, you know, you’re not the one that’s ever going to have to go out and say this NFT counts as this type of product that we historically would come with this tax rate or whatnot. So I’d imagine it would be pretty plug and play for you to transition in. Or am I wrong that you would.

Meg: No, no, no. Well said. Yeah. Our platform is designed to scale and address tax laws as they change and to integrate with whatever technology comes next. So we will adopt all the different variants of products and currencies and technologies globally and will absorb all the different rules and regulations into our tax content engine and then we’ll support them as they get adopted.

Jacob: I’ve recently seen Avalara promoting their property tax tool and I know earlier in our conversation you mentioned you’ve got your core tools, but you’re always rolling out a bunch more across the spectrum of tax that property tax tool. Maybe I was wrong, but seemed to be a little bit more of a recent offering or a newer offering. Are there other areas of tax compliance that you’re not working in quite yet, but have plans to be or kind of your growth opportunities to add in additional services?

Meg: Yeah. Our mission is to be the global platform for compliance for every transaction in the world is what our CEO says at the time. And he fundamentally believes that we can and should be part of every transaction in the world. So expanding into new tax types is always on our radar and. Property taxes, an example that we just, you know, have entered into as a result of a strategic acquisition that we made. And then we’ve got similar processes for other parts of the tax ecosystem, such as 1099 business licensing and e-invoicing that I mentioned earlier. And so we are always looking to make sure we’re solving for all these compliance friction points and either we’ll do it organically or we’ll do it through acquisitions. And acquisition has been our primary channel over the last few years. You know, we’ve made over 18 acquisitions in the last several years and so we’ve been on a bit of a tear there. And and now I think we’re trying to integrate those businesses into our core motion here at Avalara as opposed to offer them as discrete services.

Jacob: Yeah, love it. Any other key trends in the industry that you’re kind of keeping a close eye on for this year or beyond that you’re trying to anticipate that might shape the world of tax or payments in general in the next few years?

Meg: Yeah. So I’ll leave you with this. E-invoicing is going to be really impactful. A global impact. It’ll take years to ultimately get adopted, but we have a lot of our global partners and our global customers that are coming to us saying this is going to be really complex for my business and they’re going to need a global provider. So if you think about France and Spain as an example, they are rolling out mandates in July of 2024 and they’re essentially saying you must comply as a business and you must comply by having a standardized invoicing format. And so here’s how it’s got to look. Every single invoice that you do must meet these standardized requirements and you must send them through my government network. So I have a copy of them. And I mean, that’s a simplified way to explain it, but that is a huge shift on how businesses will have to transform their requirements, have to transform how they run their business and run their operations. And so I would say that is the the biggest paradigm shift we are starting to see roll out. And it’s been around for years, but it’s really been in Brazil or it’s been two big transactions, but they are starting to say it’s starting in EMEA first, but we’ll see it here in the US in the coming years is that they being the tax authorities are saying, I want to have this as a mandated requirement for every transaction and I want to make sure that I am not waiting to get my tax dollars or I have fraud in the tax transaction.

Meg: So they want to collect 100% of their tax revenue and they are going to become much more stringent in those requirements. So that is, I would say, the biggest shift on the payments side for your audience here. It continues to come up with a lot of our partners and particularly in the payments space, that taxes are ubiquitous service and they are looking for tax support as part of their point of sale systems or as part of their transaction and saying, can you just enable tax at the same time that you are rolling out some of these other services? And so a lot of our payment partners have asked for tax as another option that they can then bring to their customers.

Jacob: Yeah. And on the first one, on the e-invoicing, is that also what you referenced earlier, the government’s moving to more real time knowledge and everything to that. It’s in one part now requiring businesses like in Spain and France, where it actually is becoming law, requiring them to it’s no longer once a year or four times a year. It’s in real time. Everything is reported and there’s a standardized way to report it. And that’s where something like your company can come in handy of. We can keep up to date with those standards, what that invoice has to look like and create those for you. Yep. That seems like such a large shift. It’s nice, you know, in those countries they’ve got a year and a half or a year or so. Now given it’s almost the end of Q1, which is kind of wild to say out loud as I look at my calendar here on the know. But that seems like such a massive, massive shift that companies are going to be very happy to have a service like yours to be able to get caught up with all of that. Because like I said, at the very open it’s tax season right now, it’s the one time of year that most business owners are actually trying to have that 1 or 2 conversations they would like to have of anything tax related with their accountant or whoever’s taking care of it for them, and then stick their head back in the sand and not think about it. And now to go from that to it’s a it’s part of your everyday life. Every transaction life is quite the shift.

Meg: It really is. And we view this as another Wayfair moment for our business. I mean, it is going to be a huge lift for businesses and they’re going to need to figure this out. And you can’t go it alone. You can’t say, oh, all right, I’ll I’ll solve for all these unique country level requirements because they’re really complex. And so, you know, France alone, you’ve got like. 50 fields of data that you have to send to them in every transaction. And that’s just one country. And most businesses in Europe don’t operate just one country. So it’s like the United States, right? So you operate in one state. And so it’s certainly impacting our business over in Europe and it’ll make its way here in the US. And so it started as a B2B requirement. It’s now expanding to B2B and then it’ll eventually make its way to B2C transaction. So it’ll be a multi-year journey, but it for sure is creating a lot of stress over in our EMEA business right now and we are working really hard to make sure that we can get in front of those mandate timelines.

Jacob: If you were to put on your prognosticator hat, would you any prediction as to how quickly you think you could see that becoming similar law that’s about to go in place in France and Spain may be something that would go into law here in the states?

Meg: Yeah, think they’re already talking about it here in the US. So the last update we had was it’s in conversation an it certainly gets bounced around in terms of timeline, but I would say probably five years will see it here in the US.

Jacob: Definitely something we’re thinking about now. Not waiting till you see some headline someday that that’s a new thing your business has to worry about.

Meg: Yeah, well, a lot to worry about. So I would just focus on getting taxes right first and then we can go back to the real time requirements, invoicing requirements when that’s applicable. But for now.

Jacob: One step at a time. But start taking the steps. Yeah. Start taking them before there’s 20 to be taken in front of you. So awesome. Well, this has been wonderful. Meg Where could listeners go to learn more about you, about Avalara, follow along, learn more about the services you offer?

Meg: Oh, absolutely. Go to Avalara.com. We have a breadth of content there. We have blogs, we have all different newsletters. So I encourage your readers to sign up and and learn more. And I’m on LinkedIn, so if anybody’s interested in contacting me, absolutely.

Jacob: We’ll put all of those links in the show notes and I definitely recommend the blog. I did go through a handful of the most recent blog posts and they were super helpful for helping someone like myself who’s a little more layman in the world of tax specifically understand a lot of it very quickly, which I think is a real skill. So whoever’s writing those, you can also give them my applause to them. I will. I appreciated those. I thought they were very helpful. So those will be tagged in the notes below for anyone listening that wants to check them out. And otherwise, this has been fantastic. Thanks so much for joining me on PayPod. Meg and I hope to talk to you again soon.

Meg: Oh my pleasure, Jacob. Thanks so much for having me.

Jacob: If you enjoyed this episode and want to hear more, head on over to soarpay.com/podcast to subscribe on your podcast listening platform of choice. That’s s o a r p a y.com/podcast.

Industry Spotlight

Avalara

Avalara’s building cloud-based tax compliance solutions to handle every transaction in the world. They provide a leading suite of cloud-based solutions designed to improve accuracy and efficiency by automating tax compliance. Avalara delivers tax compliance in real-time to more than 30,000 customers with more than 1,200 signed partner integrations designed to link to business applications used for accounting, ERP, e-commerce, POS, recurring billing, and CRM systems.