Online Sales and Use Tax Calculation, and Address Verification

1. Online Sales and Use Tax Calculation, and Address Verification Online Sales and Use Tax Calculation, and Address Verification Company Introduction, System Application and Product Demonstration Presented by TaxWatch Wednesday, March 12, 2014 Presentation given by Mike Cormaci. www.watchsystems.com

2. Partial List of WatchMap Suite Government Customers: • MISSISSIPPI • Harrison County Sheriff’s Office • NEVADA • Nye County Sheriff’s Office • OHIO • Allen County Sheriff’s Office • Geauga County Sheriff’s Office • TEXAS • Lamar County • ALABAMA • Tuscaloosa County Sheriff’s Office • Jefferson County Sheriff’s Office • LOUISISANA • La. Dept. of Public Safety • La. Commission on Law Enforcement • La. Dept. of Probation and Paroles • Calcasieu Parish Sheriff’s Office • Covington Police Department • Acadia Parish Sheriff’s Office • Jeff Davis Parish Sheriff’s Office • Lafourche Parish Sheriff’s Office • St. Tammany Parish • St. Tammany Parish Sheriff’s Office • St. Charles Parish Sheriff’s Office Watch Systems is a leader in Geographic Information Systems for State and County Governments www.watchsystems.com

3. Management Team • Lou Luzynski, Managing Partner • Former President and Chief Executive Officer and co-founder of Fuelman • Lead Fuelman from a startup to a company with over 300 employees and $100 million in annual sales • Previously Senior Manager at KPMG Peat Marwick responsible for audit, tax, and management consulting services to early-stage, privately-held emerging growth companies. • B.S.B.A. degree with Cum Laude honors from St. Louis University. Certified Public Accountant. • Mike Cormaci, Sales and Marketing Partner • Extensive knowledge of business practices of state and local government. • Formerly a leading sales manager at Fuelman • Previously with Dunn & Bradstreet managing major accounts such as Proctor & Gamble, NCR, Standard Register, Bank One, National Insurance, and Humana Health Care. • Bachelors degree in Economics and Marketing from Kansas State University.

4. OffenderWatch • Sex Offender Registration, Verification, and Notification (SORN) • CrimeWatchAlert • Community notification via targeted email • ComStatWatch • Tracking and mapping of criminal activity and police resources • LEMISplus • NIBRS compliant records management system (RMS), Jail Management System (JMS) and Computer aided Dispatch (CAD)

5. Why choose Watch Systems? We understand Streamlined requirements and how they affect TaxWatch technology • We are offering a proven solution • We are delivering more than what is required by the Agreement • We employ advanced GIS technology to ensure the most accurate results • Our solution is easy to use, requires no user training, and is simple to maintain without IT resources • Our internet technology makes our solutions securely accessible from any desktop, mass communication features, work with the local jurisdictions, changes are tracked, recorded and enforceable • We have three years experience in destination based tax solutions in other states • We build to be cost effective

6. Streamlined Sales & Use Tax Requirements driving the TaxWatch solution • Section 304: Notice for State Tax Changes • Section 305: Local Rate and boundary Changes • Section 306: Relief from Certain Liability • Section 307: Database Requirements and Exceptions • Section 308: State and Local Tax Rates • Section 310: General Sourcing Rules • Section 329: Effective Date for Rate Changes • Section 401: Seller Participation

7. Streamlined Sales & Use Tax Section briefs and how TaxWatch addresses the requirement • TaxWatch • Sellers register with state • Changes in Rates or boundaries trigger email notices, • Watch works with all local authorities on quarterly rates and boundaries • Local changes communicated via email and web postings • Directors available; web, database hooks, batch processing, books. • Section 304 • Lessen the difficulty to Sellers • Provide advanced notice to sellers • Limit effective dates to 1st day of quarter • Communicate legislative changes • Failure of Seller to receive or State to notify obligates seller to collect

8. Streamlined Sales & Use Tax Section briefs and how TaxWatch addresses the requirement • TaxWatch • TaxWatch maintains database • System rules defined by database • Automated or manual methods of notice • Database records all rate and boundary changes • All addresses are “normalized” to MTSA then assigned Zip plus 4 • Section 305 • Local Rate and Boundary • Enforce effective dates 1st day of quarter • Apply changes to catalog • Apply changes after 60 notice to sellers • Database of changes for all jurisdictions • Database of all rates for jurisdictions to FIPS • Assign Five and Nine digit zip codes to each jurisdiction • Address based system to MTSA (4 U.S.C. Sec. 119)

9. Streamlined Sales & Use Tax Section briefs and how TaxWatch addresses the requirement • TaxWatch • Accuracy Rates • TaxWatch works with locals on data dictionary • Test have 95% geo-code success rates • Methodologies allow for higher rates of success • Section 306 • Relief from Certain Liability • State providing address based solution is not required to offer liability relief from errors • (Section 305 sub (F)

10. Streamlined Sales & Use Tax Section briefs and how TaxWatch addresses the requirement • TaxWatch • TaxWatch Database • Defined on rules and requirements of SSUT • “batch processing” of seller files • Local changes communicated via email, web postings, CD or Printed directories • Individual address lookup feature, GPS. • Section 307 • Database requirements and Exceptions • Electronic database shall be in “downloadable” format • Subsection (F, G) to 305 do not apply when product accepted at Point of Sale • Database not a requirement prior to state entering the agreement

11. Streamlined Sales & Use Tax Section briefs and how TaxWatch addresses the requirement • TaxWatch • TaxWatch Database functions • Establish by the state and locals • Watch works with all local authorities on quarterly rates and boundaries • Local changes communicated via email and web postings • Rate and Boundary tables reflect a Code and single rate to an address • Section 308 • State and Local Tax Rates • No multiple tax rates for PP after 12/05 Limit effective dates to 1st day of quarter • No more than 1 local sales or use tax rate per jurisdiction • Provisions of this section do not apply to some utility categories

12. Streamlined Sales & Use Tax Section briefs and how TaxWatch addresses the requirement • TaxWatch • Address or location point lookup • Unique address or GPS referencing • Seller address files can be “batch processed” and integrated into CSP database • Rate or boundary changes can be communicated to sellers • Consistent enforcement • Section 310 • General Sourcing Rules • Retail sale; • Taxed at PoS • Known • Source of Recipient • Provided • Known • Lease or Rental • Primary Property Location

13. Streamlined Sales & Use Tax Section briefs and how TaxWatch addresses the requirement • TaxWatch • Rate change enforcement and recording • Rate changes are communicated to affected sellers • Date and “transaction” recording are made for each unique “look-up” • Section 329 • Effective Date for Rate Changes • Rate increase applicable after 1st billing period starting on or after effective dates • Rate decrease affective after effective date

14. Streamlined Sales & Use Tax Section briefs and how TaxWatch addresses the requirement • TaxWatch • Sellers register with TaxWatch / State web site • Registration site provided by state or TaxWatch • If TaxWatch state establishes rules for seller information • States not participating with SSUT can use TaxWatch hosting services • Section 401 • Seller Participation • Provide an Online registration system • Registration with states obligates the seller to collect and remit sales and use tax • Sellers may have to provide more information to individual states

15. Value Added for Merchants Services for Retailers • “Batch processing” to validate the addresses and update the tax rates of a Retailers tax address file • “Transaction Processing” for a fee through direct integration to retail sales software packages • CD’s, web-posting, Books for manual lookup TaxWatch for Louisiana Dept. of Motor Vehicles

16. Jurisdictions Streets Geography Counties GIS Overlay What you don’t see. The Advanced GIS Technology • Underlying GIS technology ensures high accuracy • Counties, Street maps, Tax Boundaries, Tax Rates, are easily maintained as separate “layers”

17. Identifier Street Name Zip Jurisdictions 1240 Bluff Drive Municipalities Lakes, Rivers Streets Counties 1240 Bluff When a user enters an address, the TaxWatch GIS matches its location on the map to the corresponding taxable jurisdictions and the street address from the post office database. What you don’t see. Low risk, low maintenance • Hosting by Watch Systems means little impact on IT resources • Watch Systems maintains streets and addresses and makes changes to jurisdictions to reduces demand on Tax Administrators • Open interfaces provide ability to integrate with other state systems

18. What to look for in the demo. Simple and Effective Online Interface • Search by: • Address • Zip • Zip+4 • Forgiving address lookup • Also ability to enter GPS coordinates, wellheads • Retailers can enter the value of an item sold

19. What to look for in the demo. Quick and Accurate results • Returns Normalized Postal Address • Returns FIPS and Zip+4 • Displays Tax Rate Codes • Tax Rates • Calculates Taxes Due