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2019 RunSignup Sales Tax Presentation 8 21-19

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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. This slide presentation accompanies our August 2019 Sales Tax webinar. We will continue to update the taxability matrix in this presentation as new information becomes available.

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2019 RunSignup Sales Tax Presentation 8 21-19

  1. 1. Understanding Sales Tax on Race Registrations
  2. 2. 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 presentation. 2
  3. 3. The Sales Tax Environment is Changing Quickly ▷ South Dakota v. Wayfair (June 2018) ▷ Cleared the way for states to charge sales tax on interstate purchases ▷ Put teeth into the concept of economic nexus ▷ Did not make anything new taxable, only allowed states to collect sales tax on interstate sales ▷ Marketplace Facilitator Laws ▷ New state laws that compel platforms that facilitate sales (Amazon & 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 3
  4. 4. What is Nexus? ▷ Nexus describes the connection between a state and a business ▷ Having Nexus is generally required to compel the collection and 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 into a state can establish Nexus ▷ Marketplace Laws are Overriding Nexus Considerations 4
  5. 5. 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 RSU sales tax reports to allow races to do state sales tax reporting ▷ Preparing to implement collection and remittance in Marketplace states 5
  6. 6. What kinds 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 non-profits ▷ Some states have complex exemptions for race registrations or for the amount of time or number of events for which a non-profit can be exempt 6
  7. 7. Isn’t my non-profit exempt from sales tax? ▷ Non-Profits are exempt from federal and state income taxes ▷ Non-Profits are exempt from Paying sales tax in some states (where the non-profit is the Buyer) ▷ Non-Profits 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 non-profits as the Seller. RunSignup has commissioned research to understand these exemptions and will make them available where they exist 7
  8. 8. 8 RunSignup Taxability Matrix Overview of Tax Collection Responsibilities State Tax on Race Charge (Admission)? Tax on Merchandise? Tax on Memberships? Non-Profit Sales of Taxable Items? Tax on Tickets (Non- Profits) RunSigup to Collect on Your Behalf? Tax on Processing Fee? Alabama Yes Yes No Taxable Yes Marketplace No Alaska No No No NA No No No Arizona Yes Yes Yes Exempt No Marketplace Yes Arkansas Yes Yes Yes Taxable+ Yes+ Marketplace No California No Yes No Taxable No Marketplace No Colorado No Yes No Taxable+ No Marketplace No Connecticut No Yes Yes Taxable* No Marketplace Yes Delaware No No No NA NA No No District of Columbia Yes Yes No Taxable No Marketplace No Florida Yes Yes No Taxable No No No Georgia Yes Yes Yes Taxable+ Yes+ No No Hawaii Yes Yes Yes Exempt No Marketplace Yes Idaho Yes Yes No Taxable No Marketplace No Illinois No Yes No Exempt No Marketplace No Indiana No Yes No Taxable* No Marketplace No Iowa Yes Yes Yes Exempt No Marketplace No Kansas Yes Yes No Taxable Yes+ No No Kentucky Yes Yes Yes Exempt No Marketplace No Louisiana Yes Yes Yes Taxable+ No No No Maine No Yes No Taxable+ No+ Marketplace No Maryland Yes Yes No Taxable+ Yes+ Marketplace No Massachusetts No Yes No Taxable* No No No Michigan No Yes No Taxable No No No Minnesota No* Yes No Taxable* No Marketplace No Mississippi Yes Yes No Taxable No No No Non-Profit Notes: Asterick (*) provide a limited exemption based on a day-count Plus (+) provide a limited exemption either different from or in addition to an exemption based on day-count
  9. 9. 9 RunSignup Taxability Matrix Overview of Tax Collection Responsibilities State Tax on Race Charge (Admission)? Tax on Merchandise? Tax on Memberships? Non-Profit Sales of Taxable Items? Tax on Tickets (Non- Profits) RunSigup to Collect on Your Behalf? Tax on Processing Fee? Missouri Yes Yes No Exempt No No No Montana No No No NA No No No Nebraska No Yes No Exempt No Marketplace No Nevada No Yes No Exempt No Marketplace No New Hampshire No No No NA No No No New Jersey No Yes No Exempt No Marketplace No New Mexico Yes Yes Yes Exempt No Marketplace Yes New York No Yes Yes Taxable+ No Marketplace No Oregon No No No NA No No No North Carolina No Yes No Taxable No No No North Dakota Yes Yes Yes Exempt No Marketplace No Ohio No Yes No Taxable* No No Yes Oklahoma Yes Yes Yes Taxable+ Yes+ Marketplace No Pennsylvania No Yes No Taxable No Marketplace No Rhode Island No Yes No Taxable+ Yes+ Marketplace No South Carolina No Yes No Exempt No Marketplace Yes South Dakota Yes Yes No Taxable No Marketplace Yes Tennessee Yes Yes No Taxable No No No Texas Yes Yes Yes Taxable No Marketplace Yes Utah Yes Yes No Exempt No Marketplace Yes Vermont Yes Yes No Taxable+ No+ Marketplace No Virginia No Yes No Taxable No Marketplace No Washington No Yes No Taxable No Marketplace No West Virginia Yes Yes No Taxable* No+ Marketplace Yes Wisconsin Yes Yes Yes Taxable No No No Wyoming Yes Yes Yes Taxable+ Yes+ Marketplace No Non-Profit Notes: Asterick (*) provide a limited exemption based on a day-count Plus (+) provide a limited exemption either different from or in addition to an exemption based on day-count
  10. 10. What are 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: kevin@runsignup.com) ▷ Beta sales tax collection with select customers in early September ▷ Race opportunity to register non-profit exempt status with RunSignup where applicable in September ▷ Collection and Remittance in Marketplace states by October1 ▷ Collecting and Remitting to races at race option in non- marketplace states by October 1 10
  11. 11. Questions? 11
  12. 12. 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 presentation. 12

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