Sales Tax Auto-Calculation

IT Governance Business Case

Year 2 Funding: Sales Tax Auto-

Calculation

Background

Accounting Operations processes about 60,000 invoices annually across all City departments.

As a NC municipality, the City qualifies for full refunds of state, county, and transit sales taxes paid on direct purchases – claimed annually through a rebate request.

The system for calculating sales tax, reconciling unpaid sales tax and annual rebate filing is changing from MUNIS to Oracle. While Oracle includes a built-in engine for automating sales tax calculation, Avalara software was also procured to connect to current local sales tax laws and shifting jurisdictions.

Current Business Problem

Ongoing Avalara subscription funding is essential to sustain automated, accurate sales tax handling in Oracle.

Without continued support for current rate updates and rule changes (including frequent NC county/transit shifts), the system reverts to manual rate loading and monitoring. This would reintroduce heavy labor, accuracy risks, and inefficiencies in high-volume invoice processing and rebate filings.

Current Pain Points

Without continued Avalara funding:

• Manual review of daily tax calculations

• County/transit rate variations require frequent manual checks & updates

• Tracking of unbilled tax falls back to tedious spreadsheets

• Monthly & annual forms need slow, error-prone manual population

• High-volume invoice processing faces renewed accuracy errors & labor costs

Future State Benefits

Continued Avalara funding provides:

• Fully automated daily sales tax calculations

• Reliable, automatic handling of NC county/transit rate changes

• Seamless tracking of unbilled items

• Fast, accurate generation of refund forms & monthly reports with no added labor

• Minimal manual effort on high-volume invoices

Strategic Alignment

Analysis and Recommended Solution

Solution Analysis

• Post-Implementation Risk: Avalara scheduled to run for 1 year only; without Year 2 funding, Finance loses automated sales tax calculation for high volume of invoices

• Alternative Options:

• Manual Oracle configuration only – free but requires frequent manual research, rate file updates, and checks for NC changes; high labor and error risk

• Review other vendors – vendors Vertex and Thompson Reuters OneSource were identified as viable alternatives, but require a similar or higher cost than Avalara while lacking Avalara's native Oracle integration

• Value of continued funding:

• Ensures accuracy & reduces risk of financial errors

• Low incremental cost for high ROI in time savings

TS Architecture Review

The recommended solution meets the architecture standards for the City of Durham.

Cybersecurity Review

The recommended solution meets the cybersecurity standards for the City of Durham.