7. Commitments and Contingencies Leases The Company has non-cancelable operating leases for office facilities in the United States, Canada, United Kingdom, Belgium, Brazil and India that expire through 2028. Rent expense was $9.9 million, $5.7 million, and $4.8 million, for the years ended December 31, 2018, 2017, and 2016, respectively. The Companys obligation for payments under these leases is as follows (in thousands): Years Ending December 31 Operating Leases 2019 $ 9,095 2020 9,533 2021 10,048 2022 9,585 2023 8,965 Thereafter 32,729 Total minimum lease payments ( 1) $ 79,955 (1) Minimum lease payments have not been reduced by minimum sublease rentals of $5.4 million due in the future under noncancelable subleases. In June 2016, the Company entered into an office lease agreement (the King Street Lease), which the Company began using in the first quarter of 2018 for its new corporate headquarters. The Companys lease for its former corporate headquarters will expire at the end of 2022. The Company entered into a sublease agreement for its former corporate headquarters in the fourth quarter of 2018. Sublease income was $0.3 million for 2018. The King Street Lease provides for a term of 120 full calendar months commencing when the Landlord delivers the premises to the Company, which was in the first quarter of 2018. Pursuant to the King Street Lease, base rent will be approximately $231,424 per month for the first ten months following the commencement of the term, and will increase each twelve-month period thereafter and as additional floors are added to the lease. Further, base rent will be approximately $578,872 per month for the final twelve months of the lease. The base rent payments do not include the Companys proportionate share of any operating expenses for the location. Commitments The Company has commitments related to network infrastructure, hosting services, and software licenses. The Companys obligation for future payments under these contracts is $4.4 million, $3.5 million, and $3.5 million for each of the years ending December 31, 2019 through 2021, respectively. Contingencies Loss contingencies may arise in connection with the ordinary conduct of the Companys business activities. The Company considers all loss contingencies on a quarterly basis and based on known facts assesses whether potential losses are considered reasonably possible, probable and estimable. The Company establishes an accrual for loss contingencies when the loss is both probable and reasonably estimable. These accruals represent managements estimate of probable losses and, in such cases, there may be an exposure to loss in excess of the amounts accrued. Significant judgment is required to determine both likelihood of there being a probable loss and the estimated amount of a loss. If a loss contingency is not both probable and reasonably estimable, the Company does not establish an accrual, but will evaluate other disclosure requirements and continue to monitor the matter for developments that would make the loss contingency both probable and reasonably estimable. The ultimate outcome of any litigation relating to a loss contingency is uncertain and, regardless of outcome, litigation can have an adverse impact on the Company because of defense costs, negative publicity, diversion of management resources and other factors. Pursuant to the Companys agreement with the Streamlined Sales Tax Governing Board, Inc., or SST, the Company calculates and remits sales taxes to certain states on behalf of its customers, and that agreement contains provisions detailing the circumstances under which the Company may become liable to member states in the event of delinquent payment of taxes. In a situation where the state is conducting a sales tax audit and the Companys customer has declared bankruptcy or otherwise terminated operations before the appropriate documentation or tax liabilities have been remitted to the taxing jurisdiction, the Company could be held to be financially responsible for certain tax liabilities. The Company accrues for estimated losses for SST sales tax audits at the time it recognizes revenue based on an evaluation of the history of loss in comparison to historical revenue. The Company adjusts this estimate as needed when actual experience differs from previously recorded amounts, or when a particularly significant or unusual claim or liability is deemed probable of payment by the Company. The reserve for estimated losses from SST sales tax audits is $0.1 million and $0.1 million as of December 31, 2018 and 2017, respectively. In its standard subscription agreements, the Company has agreed to indemnification provisions with respect to certain matters. Further, from time to time, the Company has also assumed indemnification obligations through its acquisition activity. These indemnification provisions can create a liability to the Company if its services do not appropriately calculate taxes due to tax jurisdictions, or if the Company is delinquent in the filing of returns on behalf of its customers. Although the Companys agreements have disclaimers of warranties that limit its liability (beyond the amounts the Company agrees to pay pursuant to its indemnification obligations and guarantees, as applicable), a court could determine that such disclaimers and limitations are unenforceable as a matter of law and hold the Company liable for certain errors. Further, in some instances the Company has negotiated agreements with specific customers or assumed agreements in connection with the Companys acquisitions that do not limit this liability or disclaim these warranties. It is not possible to reasonably estimate the potential loss under these indemnification arrangements. While the Company has never paid a material claim related to these indemnification provisions, the Company believes that, as of December 31, 2018 and 2017, there is a reasonable possibility that a loss may be incurred pursuant to certain of these arrangements and estimates a range of loss of up to $2.0 million. The Company has not recorded an accrual related to these arrangements as of December 31, 2018 or 2017 because it has not determined that a loss is probable. While no claim has been asserted against the Company, if such claim were made, the Company would vigorously defend itself. The ultimate outcome of these potential obligations is unknown, and it is possible that the actual losses could be higher than the estimated range. On October 22, 2018, PTP OneClick, LLC (PTP) filed a lawsuit against Avalara, Inc. in the United States District Court for the Eastern District of Wisconsin. The lawsuit alleges that making, using, offering to sell, and selling AvaTax, Avalara Returns, and TrustFile (the Avalara Products) infringe U.S. Patent No. 9,760,915 held by PTP and also alleges unspecified trade secret misappropriation, unfair competition, and breach of contract. PTP seeks judgments of willful patent infringement, willful trade secret misappropriation, unfair competition, and breach of contract. PTP requests preliminary and permanent injunctions to enjoin the Company from making, using, offering to sell, and selling the Avalara Products along with treble damages and attorneys fees. Based upon the Companys review of the complaint and the specified patent, the Company believes that the Company has meritorious defenses to PTPs claims. On November 7, 2018, the Company moved to dismiss the lawsuit and to have the patent held invalid. The Company has also moved to transfer the matter to the United States District Court located in Seattle, Washington. The Company intends to continue to vigorously defend against PTPs allegations.