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1 SALES TAX JUMPSTART DIGITAL GOODIE BAG Sales Tax Jumpstart: Exclusive Half-Off Consultation Offer YETTER Tax: Consulting Services Information Sovos: Company Information Avalara: The Ultimate Guide to Exemption Certificates for Sales Tax Compliance Whitepaper CCH: Special Offers for CCH Publications Horwood Marcus & Berk, Chartered: State and Local Tax Group Information Peterson Sullivan LLP: State and Local Tax Practice and Washington Tax Service Information and Special Services Offer Thanks to our Sponsors: COMPLIANCE AUTOMATION ADMIN

2 SALES TAX JUMPSTART Compliance, Administration, and Automation Post-Wayfair Enhance your training with extra one-on-one help from Diane at HALF-OFF the regular consultation rate Beta group participants will get an exclusive half-off oneon-one consultation rate with Diane if the consulation is booked by December 14, Discounted rate is $250 for a 1-hour sales tax consulting phone appointment with Diane. Before your call, you will be asked to provide a list of your questions and/ or a summary of the situation you need help with in your meeting. Diane will review what you provide and prepare an analysis and recommended next steps. To book your consultation, visit: BOOK TODAY > COMPLIANCE AUTOMATION ADMIN

3 DIANE L. YETTER At YETTER Tax, we are not just about sales tax law and compliance, we re about helping your business thrive. YETTER Tax has been providing sales tax technology and consulting services for over 20 years. We know that one-size-fits-all doesn t work with sales and use tax as each situation is unique and different. That s why we provide the sales and use tax solutions that work with all aspects of your company from operations, customer relations, and your business philosophy. YETTER Tax has helped hundreds of companies reduce liability, implement processes, and come into compliance, from Fortune 10 to small, family-owned companies. From small to large consulting projects, we are dedicated to helping our clients tackle any sales and use tax situation they encounter. Diane Yetter is one of Accounting Today s 100 Most Influential People in Accounting for 2011, 2012, 2017, and I ve worked in the tax field for more than 30 years and I ve worked with many consultants over the years. Diane is rare. She s an embedded part of our team who is respected and admired by all - right up to most senior level management in our company. I can t imagine not having her involved. Wendy Mancini, 14 West Partnering with YETTER Tax allows you to:» Save money and costs (sometimes in the hundreds of thousands a year) whether it is by implementing more efficient workflows, helping you mitigate exposure, negotiating assessments on your behalf or a combination of these services.» Minimize risk so you sleep better at night knowing that your company is ready for any audit that comes.» Focus on strategically growing your business rather than spending time and effort on sales tax compliance» Gain the knowledge and tools to resolve and manage complex sales tax situations Call or diane@yettertax.com to talk through your questions and needs in a complimentary consultation. We ve worked with Diane and her team on a number of projects from tax to tax technology. Her team can provide assistance with so many different things related to sales/use tax. They are creative and have helped us automate manual processes. In addition, Diane s expertise with the City of Chicago personal property lease transaction tax helped us navigate tricky taxability issues in a difficult service industry. Her unique combination of project management abilities, tax accounting talents and tax technology skills makes her an outstanding expert in the field. Brenda Cassas, Acxiom Connect with me on LinkedIn or

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5 THE ULTIMATE GUIDE TO Exemption Certificates for Sales Tax Compliance

6 Contents Introduction... 1 The Exemption Certificate Challenge... 2 The Basics of Sales Tax Exemptions... 3 When Exemptions Get Complicated... 4 Best Practices for Managing Exemption Certificates... 5 Soliciting and Capturing... 5 Validating and Tracking... 6 Storing and Systemizing... 7 Automating Exemption Certificate Management... 8 Conclusion... 8 To learn how Avalara CertCapture can help streamline and simplify the exemption certificate management process, visit certcapture.avalara.com or call The Ultimate Guide to Exemption Certificates for Sales Tax Compliance

7 Introduction Achieving sales tax compliance in today s complex environment is no easy feat. There are changing rates to calculate, evolving requirements to monitor and a wide array of exemption certificates to manage. Companies must handle every step correctly, and each one is riddled with potential pitfalls. One of the most problematic parts of the compliance process is properly collecting, validating and storing exemption certificates. This highly valuable tax compliance documentation is the proof you need to support non-taxed sales. These certificates can be the difference between a costly assessment and a smooth, seamless audit. Unfortunately, properly documenting exemption and resale certificates can become incredibly complex when numerous states, entities and variables like nexus and drop shipments come into play not to mention the challenges of properly storing certificates if your business still relies on paper-based filing systems. Thorough and accurate exemption certificate management requires input from various departments; tax analysts, credit managers and IT departments all play important roles in the process. To achieve and maintain sales compliance, it s critically important to understand how exemption certificates work, when to collect them and what steps to take so they remain valid and up to date. In this guide, you will learn how to: Identify the correct certificates for various states and entities Determine which exemption certificates to use in different transactions Solicit the correct certificates in a timely and customer-friendly way Automate manual and paper-based processes to streamline certificate management Integrate exemptions certificates with other software and solutions 1

8 The Exemption Certificate Challenge Before establishing a new exemption certificate management process, it s important to be aware of potential pitfalls. Countless businesses spanning numerous industries stand to be impacted by improper management of exemption certificates this year: retail stores, ecommerce sites, manufacturers, wholesale distributors, fuel suppliers...and the list goes on. Many of these organizations think they re fully documented, organized and adequately prepared for a sales and use tax audit. Often, it s not until the audit notice arrives that a company will realize it should have had a better process in place to safeguard against invalid or missing exemption certificates that increase liability. The first and most common cause of this pain is the method of storage: While virtually no business still relies on pencils and calculators to manually calculate or file taxes, the same is not true of the tools used to manage compliance documentation. Many companies still use filing cabinets, palletized boxes and off-site storage to manage hard copy documents in systems that make it difficult to produce valid customer exemption certificates on demand during an audit. Meanwhile, credit managers and sales associates face the stress of customer service issues when valid exemptions or fillable certificates can t be produced in a timely and efficient manner. They may be forced to get numerous employees involved in validating an exemption status at the point of sale, or they might be tempted to let the lack of a valid certificate slide in favor of a verbal agreement that one will be provided after the tax-free transaction is completed. Lastly, there are the challenges inherent to homegrown automation solutions. Unless an IT team has both the capacity and specialized skillset to continually code integrations as your business grows, automating the process in-house can be an arduous and costly undertaking. Waiting until an audit notice arrives to correct these problems is bound to ensure compliance issues. The sooner you begin to streamline and simplify the exemption certificate management process, the lower your audit exposure will be. As an added benefit, many companies find that exemption certificate efficiencies also lead to decreases in customer service issues and increases in loyalty. 48 % While many companies recognize the need for an efficient exemption certificate management process, nearly half (48%) of accounting professionals in the U.S. believe an auditor would likely find mistakes like missing or incorrect compliance documents in the event of an audit. Source: Wakefield Research Report 2 The Ultimate Guide to Exemption Certificates for Sales Tax Compliance

9 The Basics of Sales Tax Exemptions When is a sale tax exempt in the U.S.? Generally speaking, there are three main scenarios where a transaction can take place without sales tax having to be collected: The buyer is tax exempt by law. Examples could include government agencies, schools, nonprofit charities and hospitals. The type of transaction is tax exempt. The buyer is using the goods in a manner that is exempt, such as reselling or incorporating it into another product. These transactions are exempt when properly documented by an exemption certificate. The product itself is non-taxable. This is often the case with certain types of food, medicine and services. Each state has its own set of rules on how to handle tax exemptions in each of these categories. Achieving compliance requires identifying the correct certificates a task that is ultimately the responsibility of the seller. If a valid certificate cannot be produced, the purchase should be taxed or the seller will risk becoming liable for uncollected taxes in the event of an audit. Did you know? The average cost of an audit is more than $114,000. Source: Wakefield Research Report 3

10 When Exemptions Get Complicated Many companies, particularly ones that deal with ecommerce and resale, face two common hurdles to overcome when transactions take place in more than one state: Nexus When tax-exempt sales span multiple states, the exemption certificate process is impacted by nexus. While each state takes its own approach to this term, nexus is generally defined as a presence in a state that s significant enough to require a business to comply with the state s sales tax laws. Common measurements for gauging physical presence include employees, property ownership and leases. For some states, nexus is established when a business advertises or solicits business in the state. In others, using company vehicles to deliver goods establishes nexus. For example, consider a brick-and-mortar floral retailer with several stores located in Cincinnati, Ohio. The presence in Ohio means the company has nexus an obligation to collect taxes and must be registered in the state. But what happens when the florist makes the arrangements it produces in Ohio available for delivery across state lines to Kentucky and Indiana? If it begins to ship flowers to customers in Florida, will it have nexus in Florida? The answers to these questions will vary from state to state and may even change as states and courts redefine how nexus is determined. To remain compliant, it s important to become familiar with different state rules and understand which exemption certificates are required for tax exempt sales in states where your company may have nexus. Drop Shipments Sometimes, a seller will accept an order for a product it doesn t actually carry. To get it to the customer, the seller places an order with a third party supplier perhaps a wholesale warehouse or manufacturer and directs that company to deliver the goods on its behalf. If this sounds familiar, your company is in a drop shipment relationship. Exemption certificates are very common in drop shipments because they typically involve resales. However, the rules around what determines nexus in drop shipment scenarios and what qualifies as an exemption can vary greatly from state to state. It s critically important to become familiar with these requirements and decide what types of exemption certificates you will accept. 4 The Ultimate Guide to Exemption Certificates for Sales Tax Compliance

11 Best Practices for Managing Exemption Certificates Proper management of exemption certificates involves several steps. Each one must be handled thoroughly and efficiently. Soliciting and Capturing Any time a client or customer claims a sales tax exemption whether it s a government agency purchasing products in bulk or a retailer purchasing items for resale a valid, up-to-date exemption certificate must be produced. The reason for this is simple: A company could be 95% compliant, but if an auditor reviews a sample set and identifies records for the 5% of accounts with incomplete or expired certificates, the business could become liable for the projected tax liability of 100% of the population of sales. This could translate into an amount much higher than just the uncollected taxes. Although it s possible to follow up months or years after a transaction, this approach becomes problematic when the customer has gone out of business, changed its name or is otherwise impossible to contact. Best Practices for Solicitation and Collection You can stay ahead of these challenges by implementing several best practices: Stay updated. If you do business in multiple jurisdictions or are in a drop shipment relationship, determine where your business has nexus. Review every possible scenario and, if necessary, call upon a specialist who is up to date on the latest state exemption certificate requirements. Be thorough. Identify every state exemption certificate your company will need for each type of transaction. This will make it easier to identify the correct compliance document at the point of sale. A good place to start is Avalara CertCapture s free exemption certificate library. Make it convenient. Develop a system that gives salespeople and credit managers easy access to blank, fillable certificates for use when onboarding new customers. In addition, ensure they can quickly verify exempt statuses of existing customers at the point of sale. 5

12 CONTINUED BEST PRACTICES FOR MANAGING EXEMPTION CERTIFICATES Validating and Tracking As your company collects exemption certificates, it s important to take a good, hard look at each one and ensure it contains all the information that will be needed in an audit. Often, all it takes is one small oversight an overlooked field, a forgotten signature to incur penalties. Expiration dates are another consideration. Exemption certificates have different expiration dates in different jurisdictions; some could be valid in perpetuity and other certificates will need to be renewed before they expire or, at the very least, before a new exempt transaction takes place. Best Practices for Validation and Tracking Avoid surprises during an audit by following these best practices: Inventory regularly. Have a formal system in place to identify and flag incomplete certificates. Then follow up with customers in a timely, efficient manner so they can complete their records in the event a certificate is missing information. Did you know? CertCapture tracks all of this automatically for you. Record expiration dates. How long a certificate will remain valid depends on the jurisdiction, so you must track these dates and plan accordingly. In many states, certificates need to be renewed every five years. In others, it s three. And there are some states where certain certificates never expire. Stay ahead of deadlines. To avoid confusion in the event of an audit, have a follow-up plan in place. Providing customers with ample time to update or submit new certificates can greatly reduce risk in the event of an audit. 6 The Ultimate Guide to Exemption Certificates for Sales Tax Compliance

13 CONTINUED BEST PRACTICES FOR MANAGING EXEMPTION CERTIFICATES Storing and Systemizing To be adequately prepared for the tax exempt portion of a sales tax audit, your company will need to know several things ahead of time: what percentage of sales are tax exempt, how many exemption certificates are on file, which ones have expired and how many are missing information or need to be updated. Having a solution in place to properly store and index certificates will not only make it easier to extract information requested by an auditor, but also ensure your company is aware of any potential liabilities well in advance. Equally important is the ability to quickly locate, verify and store certificates at the point of sale. Best Practices for Storage and Systemization Further reduce your audit risk with these best practices for managing exemption certificates: Index: Ensure all of the exemption certificates you ve collected are easily searchable and accessible. Since it s impossible to predict which certificates an auditor will request, being able to instantly comb through all of your records and extract the right ones is crucial. Integrate. Seamless integrations between your exemption certificate process and other solutions will reduce the amount of time spent matching customer accounts to compliance documents and exemption statuses. Ideally, exemption certificates should be integrated with any tax determination, point of sale, customer relationship management (CRM) and enterprise resource planning (ERP) software your company uses. Automate. Unless your company handles only a handful of certificates each year, automating the exemption certificate management process will help eliminate manual errors. Automation also reduces the amount of time and money it takes to manage audits. Krispy Kreme Doughnuts, Inc. decreased their audit liability by over 90% using CertCapture. Vida Reese Tax Analyst, Krispy Kreme Doughnuts, Inc. TVID: CAE-B50-5D5 7

14 Automating Exemption Certificate Management Manually implementing the above steps may suffice at a company that handles a few taxexempt transactions each year. However, businesses that deal with multiple jurisdictions and certificates can be at risk when traditional paper filing processes become riddled with errors and require a lot of time and energy to maintain. Companies that rely on IT departments for coding and integrating in-house systems must stay ahead of security threats that can compromise customer and company data. For these reasons, many companies are choosing to automate solicitation, collection and storage of exemption certificates and even outsource the entire management of these processes to exemption certificate specialists. When manual, paper-based and homegrown systems are replaced by automated solutions: Exemption statuses are instantly matched to customer accounts Fillable certificates are available at the point of sale Expiration dates are tracked automatically and renewal requests are sent before certificates expire Customers can complete certificates in secure web portals and mobile apps Auditors can be given access through special audit portals Conclusion In summary, to correctly collect, store, validate and manage exemption certificates for sales tax compliance, you must: Understand where your business has nexus Stay updated on rules and exemption certificate requirements in each state Make it easy for customers to submit certificates during transactions Empower employees to quickly verify an exemption status at the point of sale Regularly inventory for missing or incomplete certificates Stay ahead of expiration dates This process can be very overwhelming for many retailers, suppliers and distributors especially ones that work in numerous states or handle a lot of drop shipments. Avalara CertCapture is designed to handle the entire process from start to finish. 8 The Ultimate Guide to Exemption Certificates for Sales Tax Compliance

15 Rest Easy with Avalara CertCapture More than 2,000 customers trust Avalara CertCapture to securely manage 17 million compliance documents. By fully automating a traditionally inefficient and paper-heavy process, Avalara empowers companies to simplify and streamline the entire exemption certificate management process. Avalara CertCapture can integrate with hundreds of customer management systems, retail and ecommerce transaction systems and tax calculation engines, enabling organizations to provide compliance information at the point of sale or wherever it is needed to deliver a better customer experience while reducing risks. Be Audit Ready and Reduce Risks Access compliance documentation quickly and easily and respond to audit requests in seconds Stay current with new tax laws and regulations with automatic updates To learn how Avalara Track upcoming renewals, expirations and missing documents with automatic updates Maintain a secure digital library of documents with nearly unlimited data fields and attributes for effective reporting and analysis Optimize Time, Resources and Investments Automatically distribute personalized letters, s and faxes to request new customer forms, and collect completed forms through scans, faxes, s or a secure online portal certcapture.avalara.com. Convert paper documents into digital documents at the time of transaction with a new, easy-to-use mobile app Add new forms and documents quickly and easily, scaling to meet new business needs Deploy and support new client instances quickly and easily Maximize existing technology investments by integrating with hundreds of customer management systems and tax calculation engines through industry standard file and API methods CertCapture can help streamline and simplify the exemption certificate management process, visit Delight Customers Use simple add-ons for point of transaction systems both in-store and online to ensure compliance information is available where needed to improve customer experience We no longer have to wait for each store to send in paper certs. Information is entered in real-time and available immediately, putting us back in control of the process instead of waiting for information to filter in. With data immediately available, I can pull certificates in four hours or less that s down from months of work. CertCapture has made the audit process tremendously easier and far less painful. Greg Moosbrugger Tax Analyst, Northern Tool + Equipment 7

16 About Avalara Compliance Document Management Avalara helps organizations reduce audit risks and increase compliance by providing an easy-to-use, cloud-based solution that manages a comprehensive range of taxrelated compliance documents, including sales tax exemption certificates, federal withholding forms and excise business licenses. certcapture.avalara.com

17 When you have to be right Exclusively for Sales Tax Institute Attendees Tax & Accounting Special Offers on These Must-Have CCH Publications Multistate Corporate Tax Guide - Mid-Year Edition (2018) by John C. Healy MST, CPA, CGMA and Michael S. Schadewald Ph.D., CPA Sales and Use Tax Answer Book (2018) by Bruce M. Nelson CPA, M.A., B.A.; James T. Collins, JD and John C. Healy MST, CPA, CGMA Get quick, accurate insight into each state s positioning on a number of key issues in corporate taxation and sales and use tax. Provides extensive citation to important case and statutory laws, including varying rates, changing jurisdictional boundaries, different tax bases and more. PAGES: 800 PUB. DATE: Aug MATERIAL ID: PRICE: $ $ PAGES: 594 PUB. DATE: Nov MATERIAL ID: PRICE: $ $ % off 25% off State Tax Handbook (2018) U.S. Master Sales and Use Tax Guide (2018) Get up-to-date state tax information reflecting all state legislative activities affecting corporate and personal income taxes and sales and use tax. Navigate state tax differences and complete income tax returns with ease. Includes a state-by-state discussion of major tax topics. PAGES: 696 PUB. DATE: Dec MATERIAL ID: PRICE: $ $96.75 PAGES: 1,328 PUB. DATE: May 2018 MATERIAL ID: PRICE: $ $ % off 25% off Drop Shipments: Taxation, Compliance and Planning (2012) by Diane L. Yetter A one-stop source to help sales and use tax professionals sift through the tangle of state rules related to multi-party drop-shipment transactions. NEW SAVINGS OPPORTUNITY!! Wolters Kluwer and Sales Tax Institute have joined together to provide exclusive offers on industry-leading publications. With leading titles in taxation, accounting, sales and use, and more, our CCH Publications offer expert information and are available in both print or ebook formats. PAGES: 280 PUB. DATE: Oct EBOOK: PRICE: $ $ For this title only visit 30% off ebook Only Visit or contact Association Account Manager, Tammy Nickels, at tammy.nickels@wolterskluwer.com or , to take advantage of this special offer. 4/ CCH Incorporated and its affiliates. All rights reserved.

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24 HORWOOD MARCUS& B E R K Chartered Jordan M. Goodman Direct: I jgoodman@saltlawyers.com State& Local Taxes Jordan M. Goodman co-chairs the firm's State and Local Tax (SALT) Group. Jordan resolves state and local tax controversies for multistate and multinational corporations, including Fortune 1000 clients with complex operations, in industries such as manufacturing, retailing, financial services, e-tailing, broadcasting and telecommunications. Jordan has successfully resolved tax controversies in virtually every state and counsels businesses on the tax ramifications and benefits of various organizational structures. Clients seek him out for ideas and resolutions on a range of tax issues, including: corporate income taxes, sales and use taxes, franchise taxes, local license taxes, gross receipts taxes, business and occupation taxes, single business taxes, capital stock taxes, unclaimed property matters, nexus, apportionment, business income, unitary business groups and residency, credits, losses, exemptions, and the tax base. As both an attorney and a CPA, Jordan has a comprehensive view of tax planning issues and strategies. His experience and education enable him to deliver a creative, complete and practical approach to limiting the full range of tax exposures. He was recently elected as a fellow in the Litigation Counsel of America, an invitation only trial lawyers honorary society that includes less than one-half of one percent of American Lawyers. Jordan is one of the nation's most sought after lecturers and authors on multi-state tax issues, controversies and planning. His speaking and writing style is approachable and enjoyable, though never short on content or practical ideas. He is a member of the Editorial Boards for The Journal of Multistate Taxation and CCH State Tax Income Alert and is a Contributing Editor for Commerce Clearing House's State Tax Report. He is the author of the chapter entitled "Other State Taxes and Unclaimed Property" in Illinois Institute of Continued Legal Education's Illinois Taxes and co-author of the chapter entitled "Illinois Income Tax Considerations" for the publication Organizing and Advising Illinois Businesses. He is also co-author of the Tax Management Multistate Tax portfolios entitled "Sales and Use Taxes: The Machinery and Equipment Exemption," "Illinois Income Tax," and "Illinois Sales and Use Tax." Jordan has also authored the chapter entitled "Illinois Sales and Use Tax" in the American Bar Association's Sales and Use Tax Handbook and multiple articles on the unitary business principle, non-business income, apportionment irregularities, and situsing of services for income and sales tax purposes. He has also written dozens of other articles on a variety of state and local tax issues. Areas of Concentration Litigation and Support Multi-State Tax Planning and Assessment Mergers & Acquisitions Restructuring Tax Risk Management Accounting for Income Taxes Unclaimed Property Franchise Tax Compliance Bar Admissions Illinois, 1985 Honors Illinois Super Lawyers, , Education University of Illinois, J.D., 1985 Indiana University, B.S. in Accounting with high honors, 1982 Licenses Certified Public Accountant, Illinois Memberships The Journal of Multistate Taxation, Editorial Board CCH State Tax Income Alert, Editorial Board National Multistate Tax Symposium, Advisory Board Jordan has lectured on numerous state and local tax topics before business and professional associations, including the Council on State Taxation, the Tax Executives Institute, the Chicago Tax Club, Georgetown University Institute on State and Local Taxation, the National Institute Symposium, and annual meetings for CPAmerica, AGN International and CRI, LLC. In addition, Jordan continuously creates and presents accredited state and local tax seminars throughout the country and has been recognized as an "Illinois Super Lawyer" by his clients and peers. He is also a frequent lecturer and Faculty Member of the Sales Tax Institute.

25 HORWOOD MARCUS& B E R K Chartered David A. Hughes Direct: I dhughes@saltlawyers.com State& Local Taxes David A. Hughes is a partner in Horwood Marcus & Berk's State and Local Tax (SALT) Group. David's clients, who range from multinational corporations to individuals, all have one thing in common: the need to limit their state and local tax exposure either through planning or litigation. David advises clients on how to structure their business to reduce their state tax liabilities and he also defends clients in audits, administrative proceedings and court against tax assessments. David has represented clients in over 30 states and has advised clients on income tax, sales/use tax, franchise tax, and unclaimed property matters, including matters involving nexus, apportionment, business income, unitary business groups, credits, losses, exemptions, and the tax base. David has argued cases at the Illinois Supreme Court, the Illinois Appellate Court and the New York Supreme Court (Appellate Division). In addition to representing clients on a national basis, David is also very active in the SALT community. He is the former Chair of the SALT committee for the Illinois CPA Society and the former chair of the Chicago Bar Association's committee on state and local taxation. David also speaks and writes regularly on SALT matters. He is a coauthor of the chapter entitled "Illinois Sales and Use Tax" in the American Bar Association's Sales and Use Tax Handbook and was previously on the Editorial Board of the Journal of Multistate Taxation and Incentives. In addition, he has spoken on behalf of NYU's School of Continuing and Professional Studies, the Council on State Taxation (COST), Tax Executives Institute (TEI), the American Bar Association, the Institute of Professionals in Taxation {IPT), the Illinois CPA Society, the Unclaimed Property Professionals Organization (UPPO), the Chicago Tax Club, the Association of Consumer Vehicle Lessors (ACVL) and Telestrategies. He is also an adjunct professor at the Northwestern University Pritzker School of Law and a frequent lecturer and Faculty Member of the Sales Tax Institute. Areas of Concentration Litigation and Support Multi-State Tax Planning and Assessment Mergers & Acquisitions Restructuring Tax Risk Management Accounting for Income Taxes Unclaimed Property Franchise Tax Compliance Bar Admissions Illinois, 1991 Education Columbia University, J.D., 1991 University of Notre Dame, B.A., magna cum laude, 1988 Memberships Chicago Bar Association's State and Local Taxation Committee, Former Chair Chicago Tax Club Illinois CPA Society, former SALT Committee Chair American Bar Association Association of Consumer Vehicle Lessors (ACVL) Unclaimed Property Professionals Organization (UPPO) Adjunct Professor, LLM Tax Program at Northwestern University Pritzker School of Law

26 State and Local Taxes At Peterson Sullivan, we believe in being a business partner with our clients. We understand our clients businesses not only how they re operating today, but how they plan to do business in the future. Because we have such close relationships, we can proactively provide our clients with the knowledge they need regarding state and local tax obligations. Our goal is to assist our clients in understanding the complex web of constantly changing state and local tax laws and regulations. To that end, our state and local tax team helps customers conduct business in a way that reduces overall state and local tax risk. When tax risk is minimized, the overall cost of doing business related to taxes is reduced. WHAT WE DO We want to be the name that you think of when an issue or question concerning your multijurisdiction taxes arises. We proudly offer the following services to our clients: Washington State Combined Excise Tax Return Reviews Multistate Sales and Use Tax Reviews Sales and Use Tax Process Reviews State Income/Franchise Tax Reviews, including Allocation and Apportionment Calculations Local Jurisdiction Tax Reviews Tax Consulting for -- Mergers and Acquisitions, including Due Diligence -- Nexus Determinations, both Income/ Franchise and Sales and Use Tax -- Voluntary Disclosures and Tax Amnesties -- Tax Optimal Operating Structures -- State and Local Tax Controversies -- State and Local Legislative and Tax Policy Updates RACHEL A. LE MIEUX CMI, CPA SALT PARTNER rlemieux@pscpa.com SONJIA BARKER, CPA SALT SENIOR MANAGER sbarker@pscpa.com SPECIALIZED INDUSTRIES Retail & Distribution Dealerships Manufacturing Technology Construction Real Estate Confidence Earned. pscpa.com Health Care Aerospace Transportation Life Sciences Nonprofit Organizations Hospitality KIM LOHR SALT SENIOR MANAGER klohr@pscpa.com

27 Washington Tax Services The Washington State Department of Revenue administers the Combined Excise Tax system, which includes the Business & Occupation Tax (B&O), retail sales tax, Public Utilities Tax (PUT), and several special taxes. Currently, the Combined Excise Tax System is comprised of over 60 different tax classifications and rates. Several local jurisdictions also impose a B&O tax in addition to business license fees. Peterson Sullivan s State and Local Tax Practice assists clients with understanding the complexities of the state s tax system and in complying with the various local jurisdictions taxes and fees. Our Washington Tax Services are customized to meet the unique needs of each client. We couple our industry expertise with Peterson Sullivan s proven processes and technologies to deliver unmatched savings and the most innovative approach to tax consulting available in the market today. SPECIALISTS IN TAX SERVICES Our clients rely on Peterson Sullivan year after year for innovative tax advisory and consulting services. It s our focus on providing outstanding client satisfaction that drives us to succeed in providing services to support our clients needs in every aspect of local, state, and federal tax. We understand the complex web of constantly changing state and local tax laws and regulations. To that end, our state and local tax team helps our clients conduct business in a way that reduces overall state and local tax risk. When tax risk is minimized, the overall cost of doing business related to taxes is minimized. Peterson Sullivan wants to be the name you think of when an issue or question concerning your multi-jurisdictional taxes arises. WHAT WE DO Tax Optimization Processor for Hire Strategy Distribution Company Strategy Common Paymasters Direct Pay Permits State Tax Consulting Mergers & Acquisitions Special Purpose Entities Voluntary Disclosures Managed Audits Combine Excise Tax Return Reviews Business & Occupation Taxes Sales & Use Taxes Other Miscellaneous Taxes Refund reviews Local Jurisdiction Tax Reviews Business & Occupation Taxes Business License Fees Nexus Determinations Registration Assistance RACHEL A. LE MIEUX, CPA, CMI SALT PARTNER rlemieux@pscpa.com SONJIA BARKER, CPA SALT SENIOR MANAGER sbarker@pscpa.com KIM LOHR SALT SENIOR MANAGER klohr@pscpa.com Confidence Earned. pscpa.com

28 A Special Offer for Sales Tax Jump Start Registrants Fixed Fee Services 25% off our standard rate: Code: SUTNFP25* Phase 1 Sales & Use Tax Nexus Footprint Matrix Includes a taxability determination, activities creating nexus and when nexus was created. Fixed Fee Services 50% off our standard rate: Code: SUTAA50* Automation Analysis Includes a scorecard to assist your company in choosing a sales tax automation service provider or verification that your existing provider meets your current criteria for complying with sales tax collection and reporting requirements. *Must have registered for the Sales Tax Jump Start Program. OVERVIEW On June 21, 2018, The Supreme Court ruled in favor of South Dakota, granting the state authority to impose sales tax obligations on out-of-state transactions without requiring physical presence in the state. Since the ruling, several states have responded by implementing economic nexus provisions requiring remote sellers to collect sales tax without having a physical presence in the state. Additional states, like California for example, are considering implementing economic nexus standards. Don't wait to understand your nexus footprint or to implement automated sales tax collection procedures. Let the State and Local Tax Team at Peterson Sullivan assist your company in understanding the next steps to comply with these new economic nexus standards. CONTACT US For more information on the services we provide, please call us at or visit our Wayfair page at pscpa.com. In a brief consultation, we can assess your situation and determine how we may be of assistance. Confidence Earned. pscpa.com