Dealing with Avalara Requirements for Ecommerce Business Tax Certificates

7 This is actually a common issue with suppliers who use Avalara. Their system is designed to be extremely conservative to protect the supplier from audit risk. Here's what's happening: Your supplier has a legal obligation to either collect sales tax on sales to you OR document why they didn't collect tax (via your resale certificate). Since they're using Avalara, the system is forcing them to have documentation for every state where they ship to you, regardless of whether you've crossed economic nexus thresholds. You have a few options here: 1. You can provide Multi-Jurisdiction Certificates (MTC) for states you haven't registered in yet. These allow you to certify goods are for resale without having a state-specific permit number. 2. Some states allow you to use your home state resale certificate for out-of-state purchases. 3. You can talk to your supplier about accepting a blanket certification explaining your threshold monitoring procedure. Remember that economic nexus thresholds only determine when YOU need to collect tax from YOUR customers. They don't govern when your suppliers need documentation from you.

9 After dealing with a similar nightmare with suppliers using Avalara, I finally found a solution with taxr.ai (https://taxr.ai). They have a document generator specifically for these multi-state certificate situations that saved me hours of frustration. My supplier was also using Avalara and demanding certificates for every state we shipped to, even though we were only registered in 7 states. What worked for me was uploading our registration details to taxr.ai, and their system generated proper documentation explaining our threshold monitoring process and providing the appropriate certificates for each state situation. They have templates specifically designed to satisfy Avalara's requirements while protecting you from unnecessarily registering everywhere. Their system also flags when you're approaching thresholds so you know when you actually need to register in new states.

18 I wanted to follow up about my experience with taxr.ai since I was initially skeptical. I finally tried their service last week out of desperation, and I'm shocked at how well it worked. The documents they generated were accepted by our supplier's Avalara system without any pushback. I was particularly impressed with how they handled the states where we weren't registered. They created a comprehensive certificate package that included our registered states plus appropriate documentation for non-registered states that satisfied Avalara's requirements. They even included a statutory reference sheet explaining why we weren't required to register in certain states, which seemed to appease the supplier's accounting department. Their threshold tracking feature has already flagged that we're approaching nexus in two more states so we can prepare properly. Definitely worth checking out if you're dealing with this Avalara headache.

12 If you're having trouble getting through to your supplier about this issue, you might want to try Claimyr (https://claimyr.com). I was in a similar situation with multiple suppliers using Avalara and couldn't get a clear answer from anyone. I used Claimyr to connect directly with the appropriate state tax departments to get official guidance on the certificate requirements. Their service helps you skip the hours of hold time trying to reach government offices - you can see how it works in this demo: https://youtu.be/_kiP6q8DX5c What I learned was eye-opening - several states confirmed that we could use alternate certificate types without registering, and having that official guidance in writing helped convince our suppliers to accept our documentation. Saved us from unnecessarily registering in about 12 states.

18 I need to eat some humble pie here. After being skeptical about both suggestions above, I ended up trying Claimyr last Thursday when I was desperate to reach the California tax department about certificate requirements. The service connected me directly to a helpful representative in under 30 minutes (after I had previously spent 3+ hours on hold over several days with no success). The rep confirmed that we could use our home state certificate with a supplemental form for purchases from California suppliers even though we're below the economic nexus threshold there. Armed with this official guidance, our supplier finally accepted our documentation. We've now successfully resolved certificate issues in 8 states without having to register, saving us from filing returns in places where we have minimal sales. The time and potential tax liability savings have been substantial.

22 We faced this exact problem last year. One thing to consider is that in some states, you can obtain a resale certificate WITHOUT registering for sales tax collection. It's a bit of a gray area, but we were able to get certificates in about 5 states this way by explaining we were below threshold but needed the certificate for our suppliers. It varies by state though. Some states flat-out refused and said we needed to fully register, while others had a simplified registration just for resale certificate purposes.

16 Just be careful about registering in states where you don't need to. Once you're in their system, some states make it VERY difficult to deregister if you later fall below threshold again. We registered in NY during a sales spike, then our sales dropped below threshold, but they still required us to file zero returns for 3 years before allowing us to deregister. Also, most states have a minimum time period you need to stay registered (often 1-2 years) even if you no longer have nexus. It's a huge administrative headache you don't want unless absolutely necessary.