Pacon gets creative with tax compliance automation

Founded in 1951, Pacon provides educational and art products to teachers, students, and artists. The company has expanded its product lines in recent years, largely through acquisitions that have added complexity to Pacon’s sales tax obligations.

With Pacon’s acquisitions, sales tax requirements became more complicated and compliance became a bigger headache. Adding states only exacerbated the inefficiencies. The process of adding just one state might take as much as half a day to download and verify current rates, then update SAP. 

These steps had to be repeated for each state every month to keep up with rate changes. “We were using native SAP functionality,” recalls Joe Rossmeissl, the company’s controller. “It was difficult to stay on top of all the rate changes in all the jurisdictions.”

The tax expert at Pacon’s audit firm recommended Avalara, a cloud-based solution that integrates with SAP (and hundreds of other business applications) to automate sales tax calculation, filing, and exemption certificate management.

Since the integration with SAP was paramount to Pacon, Avalara brought in DMA (DuCharme, McMillen & Associates), a partner that specializes in integrating the Avalara suite with SAP. Joe and his team looked at two other solutions, but quickly decided Avalara was the right choice. “It does everything we need it to do, is competitively priced, and it looks like a modern app,” says Joe. “Also, I liked the DMA team who showed it to us. I was confident in their expertise right off the bat.”

Implementation and integration were surprisingly easy, according to Joe and his team. Avalara AvaTax and Avalara Returns were turned on in just a few months, even though the team was working on another acquisition during the project.

Besides the speed and ease of the implementation, Joe and his team were struck by DMA’s commitment and creativity when it came to making the solution fit Pacon’s specific needs, like dealing with buying groups or exempting foreign customers. 

“DMA really held our hands through the process,” says Joe. “In other implementations I’ve done, the third party might have suggested a workaround or told us to ‘live with it’ because our needs are unique. Instead, DMA made the solution work specifically for our business. This is one of the easier implementations we’ve done.”

“The number one benefit is the peace of mind that comes with knowing that we’re doing things the right way,” says Joe. “For example, we learned some things about our Arizona tax returns after Avalara started filing them for us … how they use location codes versus how we had been using them. And whenever we’ve seen a discrepancy in a tax rate, AvaTax has turned out to be correct, which surprised me pleasantly. It’s definitely more audit-ready than our old way of doing things — having our auditors know that we’re running Avalara is a real source of confidence.”

Another major benefit for a fast-growing company like Pacon is the ease with which they can add new states. “It’s flipping a switch in AvaTax, and I like that,” says Joe.

Pacon was able to load all sales tax states at the outset of their implementation, since they’re still in growth mode. “That might not be the way everyone implements Avalara’s suite, but it was good for us,” he says. “Now we’re set up going forward. We had a very positive experience, and we’re happy with the result.”