Sales Tax Auto-Calculation

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IT Governance Business Case Year 2 Funding: Sales Tax AutoCalculation

Finance

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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.

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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.

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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

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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

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Strategic Alignment

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Analysis and Recommended Solution

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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

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Recommended Solution: continue Avalara funding

Description

Continue Avalara funding for native sales tax calculation & auto-submittal of 1099 forms

Pros

• • •

Native integration with Oracle Automated sales tax calculation Auto-fills 1099 forms

•

N/A

Cons

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TS Architecture Review

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

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Cybersecurity Review

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

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Recommended Solution - Project Financial Estimate COST ESTIMATES

FUNDING

Implementation Costs (Hours)

Post Implementation Run Costs (Hours)/ KTLO

Internal TS Department:

15 hours

0 hours

Business Analysis

15 hours

Description

Departmental Funding Amount:

$0

Labor $ (Hours) Funding Requested (Y/N):

Y

Internal Labor New FTE – Year 1 Costs

$0.00

Architecture Office

Project One Time Costs (External)

$0.00

Cybersecurity

*Total Project Funding Requested for Year 1

$0.00

Project Management Office

*Total Recurring Project Funding Requested for Years 2+

Finance

External Labor (professional services) - setup Non-Labor $ Software - Avalara

$42,000

Software – Avalara Add-on – 1099 prep

$4,420 * Total Project Funding Requested Year 1 includes New FTE Labor, External Labor and Non Labor

CFO confirmed funding is not available

$46,420.00

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Risk Identification Description of Risk

Risk Impact (High/Medium/Low)

Vendor performance

Low

Y

N

Cyber Security

Low

Y

N

Project Team Turnover

Low

Y

N

Poor Execution

Low

Y

N

Mitigated (Y/N) Contingency(Y/N)

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Mitigation Risk (Costs) •

N/A

Contingency Risk (Costs) •

N/A

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Our ask We are asking the IT Governance Steering Committee to approve and score the business case to continue Avalara funding to automate Finance's sales tax calculation. If approved, the business case will be scored, ranked and submitted to the City Manager for final approval.