HotSpot's software platform enables those renting homes or rooms to be tax compliant each month. Avalara says the company currently manages thousands of properties in the United States. Those functions include obtaining and renewing required licenses, determining and collecting the appropriate taxes, preparing and filing tax returns, remitting payments, and tracking tax rate and law changes.

"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," said Scott McFarlane, Avalara's founder and CEO, said in a prepared statement. "This acquisition aligns with our strategy of extending our reach into new industries, providing more businesses with a single place to turn for all of their transactional tax requirements."

Movement into vertical markets was one of the factors in Avalara's recently announced reorganization of its channel program, a trend it noted includes the excise tax and retail business segments.