The Sales Tax Environment has Changed
The sales tax environment in the US has changed quickly. South Dakota vs. Wayfair cleared the way for states to require sellers to charge sales tax on interstate purchases and empowered the concept of economic nexus. Additionally, many states have passed Marketplace Facilitator Laws that compel platforms that facilitate sales to collect and remit sales tax on behalf of their sellers. RunSignup has put sales tax functionality in place to facilitate compliance for RunSignup and on behalf of the third party sellers (Race & Event Owners) that use our site.
What Kinds of Sales are Taxable
Depending upon each state’s sales tax rules (each state has their own rules) following is a list of items commonly sold on RunSignup that may be taxable: race registrations, merchandise (shirts, hats, mugs etc.), memberships, tickets (admissions) and RunSignup processing fees in addition to other items sold on our site. We consider Race & Event Owners to be the sellers of most items sold on our site except for RunSignup processing fees.
Marketplace Facilitator States
Many states have passed Marketplace Facilitator laws which compel platforms that facilitate sales for third party sellers (like RunSignup) to collect and remit sales tax on behalf of their sellers. For sales that occur in Marketplace States, RunSignup will determine which items are taxable and then calculate, collect and remit the appropriate sales tax to each of the Marketplace states where we are required to comply. Here is the RunSignup Taxability Matrix of Marketplace states and the dates on which RunSignup will begin to collect and remit on your behalf and a high level view of the set of rules we will implement.
Non-Marketplace Facilitator States
In states that do not have Marketplace Facilitator laws and that consider items sold on our site as taxable we will give races the option to “turn on” the calculation and collection of sales tax for your race or event in any of the Non-Marketplace Facilitator States. If sales tax is turned on for your event we will automatically determine the taxability for race registrations and any other items that you sell and that you map to one of our taxability codes. You have the responsibility for determining whether to “turn on” sales tax in any Non-Marketplace states where you have a race or event or where you ship any store items sold on our site. You also have the responsibility for the proper set up and taxable classification of taxable items you sell on our site. The list of non-Marketplace states is on the RunSignup Taxability Matrix. Even if you don’t “turn on” sales tax for your race, RunSignup will collect and remit tax on any taxable processing fees and will also collect and remit tax on any part of a transaction that is sourced (taxed) in a Marketplace state or any other state where RunSignup is required to collect.
Sale Tax Sourcing
RunSignup will consider race registrations and event admissions, where they are taxable, to be sourced (taxed) in the jurisdiction where the race or event is being held. RunSignup considers merchandise to be sourced in the jurisdiction where it is received by your customer. This could be the race address if that is where separately charged merchandise is picked up by your customer or it could be the shipping address for merchandise that is shipped. RunSignup considers processing fees that are subject to sales tax to be sourced in the state of the cardholder who purchases the registration, event admission or makes a donation on RunSignup. It is possible that a single registration could be taxed by multiple states. For instance a registration for a race in State A, would be taxed differently than a processing fee for registrants for that race who are from State B and potentially also subject to a third different state tax if that registrant bought a shirt and shipped it to State C.
Nonprofits and Sales Tax
Nonprofits are generally exempt from federal and state income taxes and from paying sales tax in many states where the nonprofit is the buyer of taxable goods or services. When a nonprofit sets up a race, event or even accepts donations on RunSignup the nonprofit becomes a seller on our site and the items they “sell” are subject to sales taxes. A limited number of states do offer exemptions for nonprofit sellers. We will attempt to make those seller’s exemptions available to you in the states where they are available if your non-profit fits the criteria to take the exemption. As with other state sales tax rules every state is different and an exemption for sales in one state does not necessarily mean the non-profit is an exempt seller in other states. To take a nonprofit seller’s exemption in states where they are available you will need to certify that you meet the criteria for the exemption and that you will agree to indemnify RunSignup for any uncollected sales tax in the event that the exemption was taken by an organization that did not qualify. RunSignup reserves the right now and in the future to request documents that prove that your nonprofit meets the qualifications necessary to take the nonprofit sellers exemption.
RunSignup does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. RunSignup makes no representations, warranties, or assurances as to the accuracy, currency or completeness of the information provided in this presentation.