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HotSpotbannerFresh off raising another $42 million in January, sales tax automation firm Avalara has put some of its cash to acquisition use. The Bainbridge Island, Wash.-based company has announced it’s buying HotSpot Tax, which provides tax compliance solutions to the vacation rental industry.

Avalara says that complying with sales and occupancy tax requirements has become a “significant problem” in the vacation rental and room sharing market.

Avalara CEO Scott McFarlane (photo: Avalara)
Avalara CEO Scott McFarlane (photo: Avalara)

“Second home and room rentals represent a significant and growing segment of the new sharing economy, which presents a variety of tax and compliance complexities for micro businesses and private owners,” Avalara CEO and founder Scott McFarlane said in a statement. “HotSpot Tax eliminates these challenges.”

That also makes it a logical acquisition for Avalara. McFarlane says the purchase “aligns with our strategy of extending our reach into new industries.”

Terms of the acquisition were not disclosed.

Avalara, which describes its business as cloud-based tax compliance automation with a focus on transactional (such as sales) taxes, has raised more than $200 million since launching eleven years ago. It has more than 800 employees at its headquarters on Bainbridge Island, and in other offices in the U.S. (including downtown Seattle), England and India. HotSpot Tax had been based in Colorado.

HotSpot Tax will be rebranded Avalara MyLodge as a result of the acquisition. An Avalara spokesperson says all eleven Denver-area HotSpot Tax employees have been offered, and accepted, jobs with Avalara.

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