Marketplace Sales Tax FAQ
Please note that athleteReg cannot offer tax or legal advice and is sharing this data for informational purposes only.
BACKGROUND
In accordance with the new Marketplace Facilitator laws being enacted throughout the United States, athleteReg has implemented technology to facilitate collecting and remitting state sales tax on behalf of our event directors in applicable states.
FAQ
What is a marketplace facilitator?
A Marketplace Facilitator is defined as a marketplace that contracts with third party sellers to promote their sale of physical property, digital goods, and services through the marketplace.
athleteReg is considered a Marketplace Facilitator as we facilitate the sale of goods and services between event directors and participants.
What are marketplace facilitator laws?
Marketplace facilitator laws are new requirements enacted at the state level that require marketplace facilitators (like athleteReg) to collect and remit sales tax on behalf of their third-party sellers’ (you, our event directors) transactions. For states, these laws simplify tax collection, because they can collect from fewer entities. For sellers, the benefit lies in having sales tax for certain transactions handled by the facilitator (athleteReg).
These laws, which vary state-by-state, are the result of the landmark Supreme Court decision in South Dakota v. Wayfair. The majority of states have gradually adopted these laws, with the rest expected to follow suit.
How does athleteReg determine taxability?
athleteReg completed an in-depth taxability analysis both internally and with consultants. This analysis looked closely at the specific legislation in each state, as well as all the types of transactions that would be affected — including event and race registrations, merchandise, and service fees.
athleteReg works with Avalara as our Sales Tax software provider. They track all required types of taxable items and rates. We, in turn, get the latest rates from them in real-time, record those sales tax payments, and they complete the filing for marketplace states.
How will this affect event directors?
Great news for you, the onus is on us, at athleteReg, to determine if event items are taxable in the state in which the event is hosted, and to then remit this tax on behalf of the event director. We’re doing all the heavy lifting here, so event directors don’t need to worry about correctly collecting and remitting tax.
There will be no additional cost incurred. Like any other taxable sale, we will calculate tax on each transaction and pass it along to the participant.
Event directors will have detailed reporting available as well as the ability to claim a nonprofit exemption. See below for details.
How do I know if I am in a marketplace state?
The majority of U.S. States now have some form of marketplace law in place. There are 40 states and Washington D.C. that we will now automatically collect tax in. You can see the details on state by state taxability here.
What is my responsibility in collecting, remitting, and reporting to the state?
If you are in a marketplace state, we are handling the calculation, reporting, and remitting on your behalf. If you are not in a marketplace state the collection and remittance of tax is still your responsibility.
If you have any custom taxes not covered by our marketplace tools, you can use our existing custom tax tool if you’d like.
Will you be collecting and remitting in non-marketplace states?
No. If you are not in a marketplace state, we will not collect and remit tax for you. You can use our existing custom tax tool to set up taxes if you’d like.
What if I am already collecting tax?
If you’re using our custom tax tool now, you may not need to do so any longer. If you are collecting and remitting tax on your own and your event is in a marketplace state, we likely have you covered. Contact us to confirm.
What will participants see?
If we determine that it is necessary to collect sales tax on an event, participants will see a single additional line item in the checkout cart and on their receipts for ‘sales tax’. This number encompasses all of the tax collected on the purchased items.
If a participant is refunded for an entry fee or merchandise item, any associated sales tax will also be refunded.
Are entry fees taxable?
In many states entry fees are considered taxable. In many others only merchandise sales are taxable. We will calculate this and tax appropriately. You can see the details on state by state taxability by sale type here.
What types of merchandise are taxable?
This varies from state to state. You have tools in the merchandise area to select the product type for each of your merchandise items. Based on the product type you choose, we determine if the merchandise item is taxable in your state.
Our event is run by a non-profit. Are we exempt from sales tax?
Many nonprofits are exempt from tax on certain purchases. Rulings vary state by state for nonprofits selling merchandise and event registrations. You have the ability to certify that you are eligible to take a nonprofit sellers exemption. Read more on claiming your exemption here.
Why do I have to provide proof of exemption?
We need to validate your exemption status and keep it on file to ensure tax compliance.
When you report taxes, will you report my TaxID and other details to the state?
No, it is not required. athleteReg will file an overall tax collection report across all of our events for your state, not for a specific event or event director.
What data will be available to me?
You will have access to detailed reporting options showing taxes paid on each transaction. The ‘Tax Documents’ menu item in your account is where you can look at the reporting for the tax that we have collected and remitted by date. If your accountant or state asks for your organization to pay sales tax, you will be able to provide reporting from athleteReg showing that sales tax was collected and paid on your behalf as of June 1, 2020.
