Avalara Launches Bitcoin Module for Tax Compliance Engine

Avalara has added a bitcoin module to its AvaTax compliance engine, making it the first to offer bitcoin functionality.

AccessTimeIconMay 8, 2014 at 1:00 p.m. UTC
Updated Sep 11, 2021 at 10:44 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Avalara has today added a bitcoin module to its AvaTax compliance engine.

The company is one of the leading providers of cloud-based compliance solutions focused on sales tax and other transactional taxes.

The first and only service provider to offer bitcoin functionality in a tax compliance platform, Avalara hopes the addition of bitcoin support will allow retailers, digital currency processors and wallet services to calculate sales tax and value added tax (VAT) in real-time.

History of sticky compliance issues

Avalara senior director Webb Stevens said the company has a history of researching and addressing ‘sticky’ compliance issues from the get-go. He added:

“Whether it’s preparing merchants to quickly address the litany of sales tax holidays or helping businesses run entirely on bitcoin, Avalara works hard [...] The ability to process sales tax for bitcoin transactions is one of the final, necessary steps to support bitcoin-driven business models – and the latest example of our forward-thinking approach.”

Avalara’s reasoning is simple: bitcoin has been growing in popularity for months and point-of-sale applications and other payment technologies are evolving to handle bitcoin transactions. However, compliance platforms have not been forthcoming, at least not yet.

Merchants need all the support they can get

Avalara points out that merchants are drawn to bitcoin as it has the potential to reduce or completely eliminate currency conversion fees, credit card fees and even fraud.

One of the problems faced by merchants willing to consider bitcoin is industry compliance. Regulatory ambiguity has resulted in a legal vacuum of sorts, hence many tax issues need to be addressed.

In some jurisdictions the simple act of collecting and filing sales tax or VAT can prove problematic for merchants dealing with bitcoin transactions. Stevens added:

“With many online business processing millions of transactions per day, it’s critical that they get accurate and compliant sales tax rates for every transaction.”

“Avalara intends to innovate in the handling of cryptocurrencies, just as have in handling tax and compliance issues for virtual goods, digital services and highly mobile location-based transactions.”

In essence, Avalara is trying to tap an emerging niche that didn't even exist a few years back.

A growing number of merchants are looking into bitcoin payments and many of them need an established player to handle any tax compliance issues that may emerge down the road.

Tax Image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.