We are nearing routine mode for Sales Tax since widely releasing it on December 1, 2019. Of course the purpose is to comply with state a local sales tax laws, and to make things simpler and more accurate for our customers.
We are in the process of preparing our January sales tax filings – a total of $242,199.50 we collected and will be paying on behalf of races for the month across 38 states and DC. We also collected and paid to races $67,287.19 so they could file in non-marketplace states.
Here are the Top 10 States in terms of sales tax collected:
- Kentucky – registration fee taxed
- Wisconsin – registration fee taxed
- Alabama – registration fee taxed
- Arizona – registration fee taxed
- Utah – registration fee taxed
- Oklahoma- registration fee taxed
- District of Columbia – registration fee taxed
- Arkansas – registration fee taxed
Note these are mostly states that charge sales tax on registration fees (check your race dashboard if you are a nonprofit to make sure you have enabled appropriate sales tax exemptions). Other states that charge sales tax on race fees are Hawaii, Iowa, Idaho, Kansas, Louisiana, Missouri, Mississippi, North Dakota, New Mexico, and West Virginia. Check out our Taxability Matrix for a more complete list. If you have a race in one of these states, please be aware that you are building a significant back tax liability that states will collect if you are audited.
Sales tax was calculated for reporting purposes in a total of (an intimidating and amazing) 1,761 jurisdictions, which include states, counties, cities, and local development authorities. Here are the top non-state entities we collected for:
- Chicago Amusement Tax District (Cook County)
- Tulsa, OK
- Tempe, AZ
- Page, AZ
- Maricopa County, AZ
- Kane, UT
- Teton, WY
- Houston MTA Transit
- Garfield, UT
- Kanab, UT
This all reinforces our earlier predictions that the race community probably owes a total of $10 Million of sales tax per year. Our January sales tax collections of $242K projects out to roughly $3 Million of sales tax for the year we had estimated.
The good news from the sales tax implementation is that we still have not heard any negative feedback from participants. Also in a report of the top 150 races with registrations on RunSignup in 2019 and 2020 show a slight growth in registration count (138,264 -> 138,553) and transaction dollars raised ($6,746,176 -> $6,783,483) in January. This means the sales tax did not have a negative impact on registrations – which is good for all of us!