Track1099 Acquisition: Key Details, Impact, and What Comes Next

On October 1, 2021, Avalara acquired Track1099, a company known for its online software and services for managing IRS forms. This strategic move aims to enhance Avalara's tax compliance automation tools, offering businesses a more comprehensive solution for managing their IRS form filing requirements. The acquisition signifies Avalara's commitment to expanding its compliance document management suite, benefiting businesses of all sizes.

What Is Track1099?

Founded in 2010, Track1099 specializes in the e-filing and management of 1099 forms. Its core services include secure e-delivery to recipients, state e-filing, and TIN Match service. Track1099 stands out with its IRS approval, no minimum fee policy, and seamless integration with popular accounting software like QuickBooks Online and Xero. The platform also emphasizes security with PCI compliance and 256-bit SSL encryption, serving over 300,000 businesses.

Who Acquired Track1099?

Avalara is a prominent provider of tax compliance software, specializing in automating and managing tax obligations for businesses. The company offers a range of solutions, including Avalara AvaTax for tax calculation, Avalara Returns for filing, and Avalara Exemption Certificate Management. Serving over 43,000 customers in more than 75 countries, Avalara is recognized for its comprehensive tax compliance solutions and extensive partner integrations, making it a leader in the industry.

When Was Track1099 Acquired?

Avalara acquired Track1099 on October 1, 2021. This acquisition occurred during a period of increasing regulatory requirements for e-filing IRS forms, with the IRS reducing the e-filing threshold from 250 to 100 forms per business. The timing also coincided with the introduction of the 1099-NEC form in tax year 2020, replacing the 1099-MISC Box 7 for nonemployee compensation, highlighting the evolving landscape of tax compliance and the growing need for efficient e-filing solutions.

Why Was Track1099 Acquired?

• Market Expansion: The acquisition of Track1099 allows Avalara to expand its market by offering additional compliance management services for IRS forms like 1099s, W-2s, and W-9s. This move is aimed at serving a broader range of federal and state compliance requirements, thereby reaching more businesses that need to manage these forms.
• Technology Integration: Avalara plans to integrate Track1099’s technology into its existing compliance document management suite. This integration will automate additional annual requirements for Avalara's customers, enhancing the overall efficiency and effectiveness of their compliance solutions.
• Competitive Advantage: By acquiring Track1099, Avalara strengthens its position as a leading global compliance platform. The addition of Track1099’s capabilities allows Avalara to offer a more comprehensive suite of compliance services, which can attract more customers and provide a competitive edge over other tax compliance software providers.

Acquisition Terms

• Acquisition Price: The financial terms of the deal were not disclosed.
• Payment Method: Not specified in the available information.
• Key Conditions or Agreements:
  • Avalara acquired the assets of Track1099, adding technology, content, and expertise to its platform and team.
  • The acquisition aims to integrate Track1099’s capabilities into Avalara’s compliance document management suite.
  • Forward-looking statements indicate potential growth opportunities and synergies arising from the acquisition, with a disclaimer about the risks and uncertainties involved.

Impact on Track1099

The acquisition of Track1099 by Avalara has led to significant changes in operations and management. Track1099's assets, including its technology, content, and expertise, have been integrated into Avalara's compliance document management suite. This integration aims to enhance Avalara's operational capabilities in managing IRS forms, streamlining processes, and improving efficiency. Track1099 now operates as a subsidiary of Avalara, which may involve changes in management structure and operational strategies to align with Avalara's broader goals.

In terms of product offerings, the acquisition has expanded Avalara's portfolio to include 1099s, W-9s, and other forms, simplifying federal and state electronic filing compliance for businesses. This move is expected to automate additional annual requirements for Avalara's customers, providing a more comprehensive compliance solution. Employee reactions have been positive, with Lindsey West, CEO and founder of Track1099, highlighting new opportunities to support clients. While direct customer reactions are not detailed, the enhanced services are likely to benefit Track1099's substantial customer base. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly.