Yesterday the US Supreme Court struck down a 1992 landmark decision (Quill Corporation vs. North Dakota) that had previously barred states from seeking sales tax from businesses unless they have a physical presence in the state. The 1992 decision had allowed online ecommerce businesses to thrive by not having to comply with the myriad and complex state and municipal sales tax rules found in the 45 states that charge a sales tax. The decision by the Supreme Court in South Dakota vs. Wayfair Inc. clears the way for states to seek sales tax from out of state online sellers and levels the playing field for brick and mortar stores who have contended that online retailers have had an unfair pricing advantage by not have to collect and remit sales tax.
What does this mean for my Race?
This means that in addition to the obligation that you may already have for collecting sales tax for race registrations and merchandise that you sell in your state, you may be subject to collecting sales tax for those items sold to your participants that live in other states. RunSignUp is not a sales tax expert (we suggest that you consult with your tax advisor on your sales tax obligations for items you sell as a third party seller on RSU) but our research suggests that not many of the 45 states that charge a sales tax, charge that on race registrations. This is not the case for merchandise, our research suggests that a majority of states charge a sales tax for t-shirts, hats, water bottles and other add on merchandise or store items that many races sell. If you are not charging sales tax today you may want to begin doing so if you determine you have an obligation. The good news is that RunSignUp has tools that can help you with your obligation to collect and remit sales tax where appropriate.
On your race dashboard you can select Sales Tax Setup to set up sales tax jurisdictions at the state, county or city level and then add tax tables to add the sales tax rates.
After you set up jurisdictions and tax tables you can add the items that are taxable and not taxable that you will be selling. We will then calculate the sales tax as you have designated and will remit the sales tax collected to you to remit to your state taxing authorities. We also have sales tax reporting in the system which allows you to run reports of the sales tax collected for each jurisdiction you have set up. You can read more in this sales tax blog.
We view the responsibility to determine sales taxability for the registrations and other items that you sell as a third party seller on our site as a responsibility of the race. We are not sales tax experts and cannot easily become experts in the roughly 12,000 sales taxing jurisdictions nationwide. We suggest that this may be a good time to discuss with your tax provider your sales tax obligation on the items you sell on RunSignUp. We will continue to provide the tools to calculate the tax and remit the proceeds to you to file and remit with the appropriate taxing authorities that you determine. We think there may be news and developments in this area over the coming months and years as states adjust to this ruling and issue new state sales tax regulations to capture sales tax on out of state sellers. We will continue to monitor these developments and will make updates to our system as necessary to help you comply.