Avalara, a Seattle, Wash.-based provider of tax compliance automation for businesses that has already embraced bitcoin in its tax compliance engine, announced plans to explore blockchain technology during its conference in New Orleans Wednesday, according to Accounting Today.
Peter Horadan, executive vice president of engineering, compared blockchain to cell phones. He said it can be adapted to the work everyone does.
Horadan said Nasdaq has started to trade securities using blockchain technology. He said the blockchain can track asset ownership in a shared ledger, displaying whenever a company transfers money. The technology can also track transfers of real estate and other items.
Avalara recently introduced a bitcoin module for its AvaTax compliance engine, according to CPA Practice Adviser. The feature will enable the calculation and accounting of sales tax for bitcoin transactions, allowing retailers, digital wallets, and other digital currency processors to calculate sales tax and VAT tax for bitcoin transactions in real-time.
By providing a tool for businesses to accurately track, manage and report transactions that use virtual currency, Avalara allows legitimate, tax-paying organizations to comply with the taxing jurisdictions. Avalara produces sales tax, use tax and value-added tax (VAT) systems used by companies worldwide.
The ability to process sales tax for bitcoin transactions is one of the final, necessary steps to support bitcoin-driven business models, said Webb Stevens, Avalara’s head of product.
The move could create a smoother path to bitcoin adoption for companies interested in accepting bitcoin and conducting other transactions in the cryptocurrency, according to Geekwire.
AvaTax will calculate how much tax a company will owe in bitcoin at the time it needs to pay in any jurisdiction, so it’s possible for them to convert the right amount of government-backed currency at the right time for tax payments.
The move brings a new degree of accountability, literally, to a currency that has, at times, been associated with more illicit dealings.
Once something is written on the blockchain it stays there, Horadan said, noting that it is impossible to delete a transaction.
Security is also a blockchain benefit, he noted, on account of the encryption. The owner of data in the blockchain has a set of cryptographic keys that provide a form of proof for a transaction.
The blockchain has what Horadan called a “deterministic nature.” A party to a transaction can see if another party sent money. With other models, it is not possible to check a transaction until later. Many banking transactions can’t be confirmed for days.
There is also a “single use” aspect to the blockchain. A party cannot send the same dollar to different people. “I can transfer the real estate once,” Horadan said. “I can’t transfer it multiple times.”
Scott McFarlane, Avalara’s CEO, said the company is always developing new technology. He said Avalara is a fast growing software company that has done a good job doing transactional tax and sales tax.
McFarlane began the company 12 years ago and has made five acquisitions, including VAT Applications NV, a developer of VAT compliance software, and FuelQuest’s Zytax excise tax technology.
McFarlane has developed a manifesto for the company called “Mission to Mars.”
Avalara recently introduced its CertCapture Mobile Scan App, enabling businesses to have the ability to capture and securely submit compliance documents, in real-time, at any point in the sale/purchase transaction process.
Images from Shutterstock and Avalara.
Last modified: July 13, 2020 3:15 AM UTC