We will try to provide information as directly as possible, but remember that 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 blog.
In 2018, the Supreme Court came to a decision on the case South Dakota vs. Wayfair Inc., changing sales tax requirements with online sales. These changes will affect your race, so we’ve been preparing a taxability study to determine what aspects of your race will be affected. Today’s webinar covered:
- Changes to the sales tax laws
- How we think these changes will impact your races
- What RunSignup is doing to prepare for these changes and help you navigate new sales tax laws
RunSignup does not provide tax, legal, or accounting advice. The material in this webinar, slide presentation, and additional blogs and materials were 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, slide deck, and additional blogs and materials.
Changes to the Sales Tax Laws
South Dakota v. Wayfair (June 2018) cleared the way for states to charge taxes on interstate purchases.
- Put teeth into the concept of economic nexus.
- Nexus describes the connection between a state and a business
- Having nexus is generally required to compel the collection & remittance of sales tax
- Physical Nexus: Maintaining an office or other facility or having an employee operating in the state
- Economic Nexus: SD v. Wayfair empowered economic nexus statutes, minimum $ amount of sales or transactions in a state can establish Nexus.
- Marketplace laws are overriding Nexus considerations.
- Did not make anything new taxable, only allowed states to collect sales tax on interstate sales.
Marketplace Facilitator Laws are new state laws that compel platforms that facilitate sales (Amazon, Wayfair, and others) to collect and remit sales tax on behalf of their sellers.
- Currently 35 states have marketplace facilitator laws. Experts predict 45 states with sales tax will have a marketplace facilitator law within another year.
- RunSignup and other platforms that facilitate the sale of registrations and tickets for sellers will need to comply.
What is RunSignup doing about Sales Tax?
Commissioned Sales Tax Study
- Determined what common items sold by races and RunSignup are taxable in what states (taxability matrix)
- Determined in what states RunSignup will collect and remit on behalf of races (marketplace facilitator) and in which states races will make their own decisions on where to collect and remit.
Updating RunSignup platform sales tax functionality
- Incorporating item taxability matrix into race setup and checkout
- Connecting to sales tax automation platform for on demand tax rates at checkout
- Building new RunSignup sales tax reports to allow races to do state sales tax reporting.
- Preparing to implement collection and remittance in marketplace states.
What kind of things are taxable?
- Race registrations, merchandise (shirts, hats, mugs, etc.), memberships, tickets (admissions), processing fees
- Each state has their own rules on taxability of each of these items
- Each state has their own rules about exemptions for nonprofits
- Some states have complex exemptions for race registrations or the amount of time or number of events for which a nonprofit can be exempt.
Isn’t my nonprofit exempt from sales tax?
You can read more about nonprofits and sales tax here.
- Nonprofits are exempt from federal and state income taxes.
- Nonprofits are exempt from paying sales tax in some states (where the nonprofit is the buyer)
- Nonprofits are not the buyer of race registrations, they are the seller when they host a race
- Being exempt from paying sales tax on purchases does not make you exempt from collecting sales tax on sales
- A limited number of states do exempt nonprofits as the Seller. RunSignup has commissioned research to understand these exemptions and will make them available where they exist.
RunSignup Taxability Matrix
We will continue to update this as we learn more. Let us know if you see something off in our taxability matrix. Include specific state statutes and/or rulings (email: email@example.com).
The most current version of our taxability matrix can be found on our website, or directly via this link: https://docs.google.com/spreadsheets/d/1JYVvfPi4klepQOxW70465C1KNcai4hbJ9vhXR4Hx4FA/edit#gid=0
What are the next steps for RunSignup and Sales Tax?
Let us know if you see something off in our taxability matrix. Include specific state statutes and/or rulings (email: firstname.lastname@example.org).
- Beta sales tax collection with select customers will start in early October.
- There will be an opportunity for races to register nonprofit exempt status with RunSignup where applicable in October.
- Collection and remittance in marketplace states will begin by November 1 2019.
- Collecting and remitting to races as an option in non-marketplace states will also begin by the end of November, 2019.