1. How Prentke Romich Company Automated Sales Tax What QAD Users Need to Know About Managing Sales Tax 1 © Avalara

2. Making sales tax less taxing Introduction 2 Mike Alpert Mike Alpert is the Strategic Alliances Manager with Avalara focusing on Avalara's product integrations with QAD. Mike performed his first ERP implementation beginning in 1991 while working for Accenture. Since then, his experience involves a variety of roles in the software industry including developer, development manager, business development, project management, and sales. Mary Bing Mary Bing is the IT Director at Prentke Romich Company (PRC), an employee owned company in Wooster, Ohio that designs and manufacturers technology products for people with speech disabilities. Since 1999, Mary had guided PRC IT strategy, including implementing QAD and Avalara’s AvaTax. She also serves as Chair of the ESOP Communications Committee, a position she’s held since 2008. CONFIDENTIAL & PROPRIETARY |

3. © Avalara 1.Sales Tax is Hard 2.You Try It 3.How PRC Conquered Sales Tax 4.About Avalara 5.Questions and Contacts What we’ll cover 3

4. Making sales tax less taxing 100,000 + distinct taxability rules Exempt Products Exempt Organizations Tax Holidays Thousands of changes each year State-provided info often missing, misleading, or wrong Sourcing rules 14,700+ distinct tax jurisdictions in North America Nexus rules Situs E-commerce rules Destination based Origin based Home Rule States Hybrid sourcing Zip codes don’t match tax jurisdictions Sales tax is hard.

5. Making sales tax less taxing Sales Tax: The Challenge 5 CONFIDENTIAL & PROPRIETARY | Do I have to collect (and if so, for whom)? How do I know what to charge (and is that info accurate)? How do I register, report, and remit? For what do I have to collect? YOU ARE HERE

6. Making sales tax less taxing 150+ million mailing addresses 11,000+ jurisdictional rules 35,000+ sales / use / rental tax rates ~ 30 M product / service exemptions 750,000+ buyer / seller exemptions

7. Making sales tax less taxing Understanding nexus. Knowing where you need to collect. “Nexus” describes the connection between a state and a business Having nexus allows a state government to require an out-of-state company to register and collect tax The out-of-state company must have “physical presence” – but that definition is ambiguous and always up to interpretation

8. Making sales tax less taxing Understanding sourcing rules – “situs”. Origin-based states for products (destination-based for services) Arizona, Illinois, Missouri, New Mexico, Ohio, Pennsylvania, Tennessee, Utah, Virginia Mixed source states California ̶ Counties are origin- based; Cities & STJs are destination-based ̶ Services are always destination-based Texas ̶ Cities and counties are origin-based based; STJs are destination-based ̶ Some services are destination-based Destination-based states All the Rest

9. Making sales tax less taxing Product and Service Taxability What is taxable in one state, may be exempt in another Check with each jurisdiction for unique product taxability laws ̶ Product taxability laws are not consistent ̶ Similar products might be taxed differently ̶ Different industries have varying taxability rules Taxable Non-taxable

10. Making sales tax less taxing You Try It – Find the Tax Rate Seller: –Avalara 100 Ravine Lane Bainbridge Island, WA 98110 –Assumption: Seller has Nexus in Missouri Buyer: –American Business Futures (ABF) 1111 E Broadway Columbia, MO 65201 –Assumption: ABF is non-Exempt Product: Canned Software, Shipped on Disc 10 What is the Correct Tax Rate?

11. Making sales tax less taxing The Answer Is… 11 CONFIDENTIAL & PROPRIETARY |

12. Making sales tax less taxing 4.725% But Wait…There’s More! 12 CONFIDENTIAL & PROPRIETARY |

13. Making sales tax less taxing Prentke Romich Company Pioneers in the field of assistive technology and augmentative communication for people with speech disabilities

14. Making sales tax less taxing Who is PRC? Pioneer in the field of using technology to help people with speech disabilities Design, manufacture, and repair hi-tech medical products Provide services to support language acquisition 140 employee owners 5 divisions

15. Making sales tax less taxing PRC Locations PRC, located in Wooster, OH, has field representatives in about 36 states, giving them a presence and nexus Saltillo, located in Millersburg, OH has field representatives in 7 states Subsidiaries in UK, Germany and Australia 15 CONFIDENTIAL & PROPRIETARY |

16. Making sales tax less taxing PRC Systems QAD – SSM, PCO/PCR, Vertex –Installed in 2004 Subscription service websites (available in US, UK and Australia) AAC Language Lab –Therapy materials & lesson plans iShare PRC –File sharing and data storage Realize Language –Analysis of language samples

17. Making sales tax less taxing Saltillo Systems Quickbooks Pro Ecommerce site 17 CONFIDENTIAL & PROPRIETARY |

18. Making sales tax less taxing Factors driving change Rapid growth in nexus for Saltillo Vertex license limited to one server connection Building out services websites Adding UK and Australia to services websites 18 CONFIDENTIAL & PROPRIETARY |

19. Making sales tax less taxing Objectives Provide tax solution for a subsidiary running Quickbooks Provide tax solution for website subscription services Provide VAT tax solution for subscription services in the UK and Germany Centralize sales tax management and transaction records Automate returns and gain efficiencies in accounting department

20. Making sales tax less taxing Possible Options QAD –Global Tax Management: manually configure tables –Vertex and Sales and Use Tax Interface (SUTI) Quickbooks –Manually configure tax tables in QB –Purchase Vertex license –Purchase license from another vendor Ecommerce –Purchase additional Vertex license –Purchase license from another vendor 20 CONFIDENTIAL & PROPRIETARY |

21. Making sales tax less taxing Action Plan January – Saltillo and Quickbooks Implementation February – Saltillo AvaTax Returns April – Saltillo e-Commerce site implementation May – Install QAD Connector June/July – QAD configuration and testing August 1 – QAD go-live September – services website implementation October – PRC AvaTax Returns 21 CONFIDENTIAL & PROPRIETARY |

22. Making sales tax less taxing Saltillo Action Items Configured Saltillo company in Avatax Admin console –Set up Nexus –Set up tax rules –Set up automatic returns Quickbooks – implementation 1 week –Installed plug-in Web services – 1 day –Install api and modify custom shopping cart

23. Making sales tax less taxing PRC Action Items QAD Implementation - 60 days –Installed api –Configured tax class, tax usage, tax rate, tax zone, tax environment –Cleaned up customer and item records –Selected product codes –Exemption overrides –Special tax rates Website Services – 1 day –Install api and modify shopping cart

24. Making sales tax less taxing AvaTax vs. Vertex – what did we gain? 50% reduction in annual costs and fees Licensing flexibility Revenue savings used to expand services – automated returns Simple and easy installation Reduced administration – no monthly updates Large selection of product codes, taxability managed by Avalara Collect VAT tax for UK web services business

25. Making sales tax less taxing Just like outsourcing payroll, companies that outsource sales tax benefit by: Achieving compliance Cutting costs Increasing efficiencies Focusing on growth

26. Making sales tax less taxing How does it work? QAD

27. Making sales tax less taxing Sales tax end-to-end compliance

28. Making sales tax less taxing Avalara’s capabilities continue to grow Expanding Integration Hundreds of integrations on all major commerce platforms Improving Technology Added support for Lat/Long, new REST API, UPC taxability, and high-availability cloud deployment Avalara Services Expanded offering to customers with related applications CONFIDENTIAL & PROPRIETARY | 28

29. © Avalara Mike Alpert Channel Development Manager, Avalara Mike.Alpert@Avalara.com Q&A