Event registration platform RunSignup is rolling out its new sales tax functionality throughout this month. The aim is to address the ‘dynamic changes in sales tax laws and making it easier for races to stay in compliance with their state laws.’
The release will be gradual, beginning with an initial five US states (Florida, Michigan, Tennessee, Kansas, and Missouri) yesterday, November 12, 2019. All states are expected to have sales tax functionality in early December.
The new sales tax system is a response to a wave of changes to state sales tax laws following the landmark Supreme Court decision on South Dakota v Wayfair in 2018, which changed the way in which online sellers are treated in regard to sales tax.
Tax laws are exceptionally complicated, and RunSignup adds that it cannot provide tax, legal or accounting advice. However, it has worked with professionals to prepare a taxability study indicating what they believe is taxable of the common items sold online (such as registrations, merchandise, memberships and processing fees). This complex set of rules is built into the sales tax system to ‘help take the guesswork out of sales tax collection and reduce their potential liability.’
With the new ruling, RunSignup notes that two groups of states have emerged:
- Marketplace States are those with laws that require an online entity such as Amazon, Wayfair, or RunSignup (and other registration companies) to collect and remit sales tax on behalf of the sellers (or races) on their platform. By the beginning of 2020, this group will contain 38 US states. When the sales tax system is fully released, RunSignup will be required to collect and remit sales tax for all Marketplace States.
- Non-Marketplace States are those in which the online entity (like RunSignup) is not required to collect or remit sales tax for an event. However, in some of these states, the race is still responsible for sales tax collection and payment. In Non-Marketplace States, races will be able to choose if they want to use the sales tax system to calculate the taxes they should be collecting, but will be responsible for remitting the taxes.
Bob Bickel, CEO and Founder of RunSignup said, “In the aftermath of the Wayfair case, we felt that we had a responsibility to take a leadership position in the endurance industry. Races who are not correctly collecting sales tax are in jeopardy of owing back taxes and the new sales tax system will help them to comply with their state’s laws.
“Additionally, by complying with the new Marketplace Laws and remitting on behalf of the races in those states, RunSignup ensures that those customers will not get ensnared in any legal or financial fallout from non-compliance. At the end of the day, it’s all about mitigating risk for our customers.”
The roll-out of the new sales tax system began with a release in five Non-Marketplace States (Florida, Michigan, Tennessee, Kansas, and Missouri), where races can now opt-in to use the system. The first Marketplace States, Washington and South Carolina, are expected to be released during the week of November 18, with the remainder of Non-Marketplace States being turned on before Thanksgiving and all US states fully released in early December.
In some states (but not all), non-profits are exempt; any exempt non-profits will have until December 15, 2019 to specifically setup the exemption within the system.