The answer to my original question is "Yes, you need a Digium license installed to do the transcoding. Additionally, if you open up different codecs on the trunk you can avoid this".
Bucasia, I was able to bypass this issue by doing as you instructed. When allow=ulaw,alaw,gsm is in the sip.conf with the trunk the call does reach the switch and plays the proper IVR files according to the order in a2billing.php. I've hit an entirely different issue now with dead-air from the IVR. The logs show the audio files playing, but the person dialing in gets dead air. That issue has been logged here if you want to take a look:viewtopic.php?f=33&t=10296
Thanks for your help!