Sales Tax Software: Bigger Than A Rate (TaxWire Origins) with Andrew Rea
Andrew Rea, CEO of TaxWire, discusses how sales tax compliance is far more complex than most people realize, sharing his journey from discovering massive compliance failures at a previous company to building a modern tax engine and compliance platform that prioritizes accuracy and service-level support for mid-market businesses.
Summary
Andrew Rea, co-founder and CEO of TaxWire, a sales tax and indirect tax compliance startup, shares his unexpected entry into the tax software industry. He previously worked in tech startups and ran finance at a venture-backed food delivery service for K-12 schools. When an RFP required confirming sales tax compliance in multiple states, he discovered the company was not compliant in several jurisdictions—charging tax in some states but not remitting it, and in others not charging at all. He found that someone had simply hardcoded tax rates without understanding the complex, nuanced tax implications of prepared food.
Searching for solutions, Rea discovered that most existing tax software providers couldn't handle his company's complexity and declined to work with them. This led him to consider building a solution. He consulted with industry experts including Judy (from Aprio) and Mark Fasciano from TaxJar, who encouraged him to pursue the opportunity. After a year and a half of development before onboarding a single customer, TaxWire launched with two business models: white-label solutions for accounting firms and direct sales to finance teams.
Rea emphasizes that sales tax software is significantly harder than outsiders assume. When raising funding, investors questioned why it couldn't simply be tax rates in a database. However, the domain is deeply complex—tax categorization is challenging, business data collection is messy (customers don't collect billing addresses, use inconsistent systems), and compliance involves intricate rules that vary by jurisdiction and product type. Colorado's 2023 delivery fee tax exemplifies this: a seemingly simple fee actually generates billions in revenue and requires precise transaction-level tracking.
TaxWire differentiates itself through two main factors: a sophisticated tax engine comparable to major vendors like Avalara (using geocoding and latitude/longitude for accuracy), and a service-oriented approach where account managers are tax experts who actively support customers during onboarding and filing. The company emphasizes that improper setup is the leading cause of customer dissatisfaction with tax software—automation magnifies errors if configured incorrectly.
On integration strategy, TaxWire prioritizes connectors to common platforms (NetSuite, QuickBooks, Xero, Shopify, Stripe) rather than requiring custom development, recognizing that mid-market businesses use diverse systems for billing, inventory, and accounting. A key insight: most business software companies (QuickBooks, NetSuite, Shopify) have native tax functionality but lack the ecosystem depth needed for true compliance—they can't handle taxability rules or exemption certificates. This is why specialist tax software remains essential.
The speakers also note that sales tax non-compliance remains widespread despite eight years post-Wayfair, with millions of businesses operating without proper licensing or compliance. They discuss how transaction-level data systems enable proper apportionment reporting across multiple tax jurisdictions, including local taxes (Los Angeles, Philadelphia, Chicago) that many businesses overlook.
About this episode
<p>In this episode of the SALTovation Podcast, Aprio's Meredith Smith and Judy Vorndran talk with Andrew Rea, co-founder and CEO of Taxwire. Andrew tells the story of how he got into the tax business, which stemmed from a hard-to-answer question regarding state sales tax compliance in an RFP. After a journey into just how complex taxes are and realizing taxes are much bigger than just rates, Andrew decided to create a new firm, Taxwire, to help businesses address these issues.</p><p></p><p>Key Takeaways:</p><p>● Sales tax exposure can accumulate quietly inside a fast-growing business. Charging tax without remitting it, often the result of a hard-coded rate, may require historical cleanup, penalty waiver requests, and out-of-pocket cost.</p><p>● Product taxability is rarely simple. Prepared food can be taxed differently depending on how an item is added to a cart or how it is delivered, which makes categorization one of the harder problems to get right.</p><p>● Determination is only half the work. Getting transaction data into the return correctly may be the harder half, especially when billing addresses are incomplete or missing entirely.</p><p>● Businesses that run separate systems for B2B and B2C billing can end up filing incomplete returns, since exempt sales still belong in gross receipts.</p><p>● "You may feel like you're not going to get audited now," Andrew notes, but as companies scale, audits can become a natural part of doing business, and today's shortcuts can become tomorrow's regrets.</p><p>● Proactive SALT advice is available. If companies cannot justify a full-time in-house specialist, outside SALT advisors can help companies mitigate risk.</p><p>Connect:</p><p>● Website: https://www.aprio.com/business-tax/state-local-tax-salt-consulting/</p><p>● Meredith Smith on LinkedIn: https://www.linkedin.com/in/meredith-smith-047aa13/</p><p>● Judy Vorndran on LinkedIn: https://www.linkedin.com/in/judyvorndran/</p><p></p><p>Connect with Andrew</p><p>● Andrew Rea on LinkedIn: <u><a href="https://www.linkedin.com/in/andrewrea1996/" rel="noopener noreferrer" target="_blank">https://www.linkedin.com/in/andrewrea1996/</a></u></p><p>● Website: <u><a href="https://www.taxwire.com/" rel="noopener noreferrer" target="_blank">https://www.taxwire.com/</a></u></p><p>● Taxwire LinkedIn: <u><a href="https://www.linkedin.com/company/taxwire/" rel="noopener noreferrer" target="_blank">https://www.linkedin.com/company/taxwire/</a></u></p><p>● Subscribe on your favorite podcast app.</p><p></p><p>Disclaimer:</p><p>The views, thoughts, and opinions expressed on the SALTovation podcast, including that of all participants, are the speaker's own and do not represent the views, thoughts, and opinions of Aprio or any of its affiliates. The material and information presented on the podcast is for general information purposes only. The Aprio name and all forms and abbreviations are the property of its owner and its use does not imply endorsement of or opposition to any specific product or service.</p><p>#Aprio #SALT #SalesTaxAutomation #MeredithAndStacey #AccountforAnything #TaxPodcast #SALTovation #StateTax #TaxPolicy #TaxCompliance #TaxEngine #IndirectTax #Wayfair #NetSuite #TaxTech</p><p>Mentioned in this episode:</p><p><strong>Schedule a Call with the Aprio Team Now!</strong></p><p><a href="https://saltovation.captivate.fm/contact">Introductory Call</a></p>
Key Insights
- Andrew Rea discovered that investors frequently underestimate sales tax software complexity, with one investor asking 'isn't it just some tax rates in a database?' when in fact tax categorization, state-specific rules, and nuanced implications (like prepared food taxation) make the domain substantially harder than perceived.
- Most established business software platforms (QuickBooks, NetSuite, Shopify) have attempted to build native tax functionality but lack the full compliance ecosystem, unable to handle taxability rules or exemption certificates, which is why specialist tax software companies remain essential.
- The primary cause of customer dissatisfaction with existing tax software vendors is typically improper initial setup rather than the software itself—automation configured incorrectly magnifies errors, making onboarding and expert support critical differentiators.
- Many growing mid-market companies operate with fragmented data systems (different platforms for CRM, billing, accounting, inventory), and a core value of tax compliance software is stitching together data from multiple sources to produce accurate returns and apportionment across jurisdictions.
- Despite eight years post-Wayfair and increased market awareness, widespread tax non-compliance persists because most businesses still lack proper systems, licensing, or understanding of their compliance obligations, and this gap represents significant untapped market opportunity.
Topics
Transcript
State and local taxes can slow business down. With so much at stake, leaving your SALT strategy to chance is not an option. That's where the SALTIVATION team at Aprio comes in. Our team delivers practical, business-focused solutions, no matter where you operate, to help your company stay agile and competitive. We handle your tax challenges with your goals in mind, so you can stay focused on growth. Ready for a smarter salt strategy? Schedule an introductory call today at aprio.com slash salt. I remember an investor told me this when I was first raising money, our first round of funding, and they were like, isn't it just some tax rates in a database? How hard can this be? And…
Full transcript available for MurmurCast members
Sign Up to Access