Avalara to Acquire New Horizons Systems, LLC

BAINBRIDGE ISLAND, Wash.—(BUSINESS WIRE)—November 14, 2007— Avalara (www.avalara.com), a leading provider of web-hosted sales tax management services, today announced that it has entered into an exclusive agreement to purchase New Horizons Systems, LLC, a supplier of business geographic and tax jurisdiction assignment software products and data files. By acquiring New Horizons Systems, LLC, Avalara expects to accelerate delivery of next generation services while enhancing its position as the industry's premier accurate sales tax management service provider.

Specializing in special tax district geometry, New Horizons Systems is one of only two data providers for geographic tax determination in the United States. Once the acquisition is finalized, Avalara will be the only provider in North America of end-to-end sales tax management services with this level of geographic information system (GIS) mapping technology.

"The data sets provided by New Horizons Systems create geographic boundary files that are consumable using map viewers. By layering shape files for state, county, city and special taxing district boundaries onto a map, business professionals can visually see the intersection of these geographic boundaries and the resulting highly accurate taxing regions," said Rory Rawlings, founder and chief tax automation officer of Avalara.

Currently there are more than 12,500 taxing regions within North America, each with a correlating set of tax statutes and regulations, including rates and rules. These taxing regions are the foundation for accurate sales tax calculation and compliance.

"Prior to taxing regions, businesses used ZIP codes for determining the appropriate rates and rules to apply to a sales transaction. Designed by the United States Postal Service for efficient mail delivery, ZIP codes do not necessarily coincide with jurisdictional boundaries, and therefore only offer an approximate answer," said Rawlings. "With class action lawsuits against businesses charging wrong sales tax rates, and more sophisticated audit capabilities by the states and local jurisdictions, there is a demand for solutions with a higher degree of accuracy."

"States and taxing authorities have placed a huge burden on businesses with their complex requirements to comply with sales tax legislation," said Steve Kranz, general counsel for the Council On State Taxation (COST). "Historically, the risk of not collecting enough sales tax resulted in penalties once audited. Today, businesses need not only be concerned about audit penalties, but also class action lawsuits. In recent years, the number of class action lawsuits has been increasing, significantly due to inaccurate assigning of the proper tax rate as well as the proper jurisdictions. Frequently the mistake is in jurisdictional assignment. Providing companies the capability to see on a map that they are correctly assigning the sales transaction to the right taxing jurisdictions is highly valuable and can help to minimize risk."

"This acquisition will help facilitate sales tax management software innovation and ensure that AvaTax continues to be the fastest, easiest, most accurate and affordable way for small and mid-sized businesses to manage compulsory sales tax functions," said Scott McFarlane, CEO of Avalara.

Both Avalara and New Horizons Systems, LLC are privately held. Financial details of the transaction were not disclosed. The acquisition is expected to be completed in the first fiscal quarter of 2008, subject to due diligence and customary closing conditions.

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.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

For more information, contact Andrea Anderson, director of marketing at 206-780-7008.


Andrea Anderson, Director of Marketing

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