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Sales Tax is Coming

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Our new Sales Tax System is rolling out, and we're here to explain what we are doing to help races comply with state sales tax laws.

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Sales Tax is Coming

  1. 1. Sales Tax is Coming!
  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 37 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 State Tax on Race Charge (Admission)? Tax on Merchandise? Tax on Memberships? Non-Profit Sales of Taxable Items (Merchandise & Memberships Only)? Tax on Race Charge & Tickets (Admissions) (Non-Profits) RunSignup to Collect and Remit to State on Your Behalf (Marketplace State)? Tax on Processing Fees AK - Alaska No No No NA No No No AL - Alabama Yes Yes No Taxable Yes Yes No AR - Arkansas Yes Yes Yes Taxable+ Yes+ Yes No AZ - Arizona Yes Yes Yes Exempt No Yes Yes CA - California No Yes No Taxable No Yes No CO - Colorado No Yes No Taxable+ No Yes No CT - Connecticut No Yes Yes Taxable* No Yes Yes DC - District of Columbia Yes Yes No Taxable No Yes No DE - Delaware No No No NA NA No No FL - Florida Yes Yes No Taxable No No No GA - Georgia No# Yes Yes Taxable+ Yes+ No No HI - Hawaii Yes Yes Yes Exempt No Yes (beginning 1/1/2020) Yes IA - Iowa Yes Yes Yes Exempt No Yes No ID - Idaho Yes Yes No Taxable No Yes No IL - Illinois No Yes No Exempt No Yes (beginning 1/1/2020) No IN - Indiana No Yes No Taxable* No Yes No KS - Kansas Yes Yes No Taxable Yes+ No No KY - Kentucky Yes Yes Yes Exempt No Yes No LA - Louisiana Yes Yes Yes Taxable+ No No No MA - Massachusetts No Yes No Taxable* No Yes No MD - Maryland Yes Yes No Taxable+ Yes+ Yes No ME - Maine No Yes No Taxable+ No Yes No MI - Michigan No Yes No Taxable No No No MN - Minnesota No* Yes No Taxable* No Yes No MO - Missouri Yes Yes No Exempt No No No MS - Mississippi Yes Yes No Taxable No No No
  9. 9. 9 RunSignup Taxability Matrix State Tax on Race Charge (Admission)? Tax on Merchandise? Tax on Memberships? Non-Profit Sales of Taxable Items (Merchandise & Memberships Only)? Tax on Race Charge & Tickets (Admissions) (Non-Profits) RunSignup to Collect and Remit to State on Your Behalf (Marketplace State)? Tax on Processing Fees MS - Mississippi Yes Yes No Taxable No No No MT - Montana No No No NA No No No NC - North Carolina No Yes No Taxable No No No ND - North Dakota Yes Yes Yes Exempt No Yes No NE - Nebraska No Yes No Exempt No Yes No NH - New Hampshire No No No NA No No No NJ - New Jersey No Yes No Exempt No Yes No NM - New Mexico Yes Yes Yes Exempt No Yes Yes NV - Nevada No Yes No Exempt No Yes No NY - New York No Yes Yes Taxable+ No Yes No OH - Ohio No Yes No Taxable* No Yes Yes OK - Oklahoma Yes Yes Yes Taxable+ Yes+ Yes No OR - Oregon No No No NA No No No PA - Pennsylvania No Yes No Taxable No Yes No RI - Rhode Island No Yes No Taxable+ Yes+ Yes No SC - South Carolina Yes Yes No Exempt No Yes Yes SD - South Dakota No Yes No Taxable No Yes Yes TN - Tennessee Yes Yes No Taxable No No No TX - Texas No Yes Yes Taxable No Yes Yes UT - Utah Yes Yes No Exempt No Yes Yes VA - Virginia No Yes No Taxable No Yes No VT - Vermont Yes Yes No Taxable+ No+ Yes No WA - Washington No Yes No Taxable No Yes No WI - Wisconsin Yes Yes Yes Taxable+ No Yes No WV - West Virginia Yes Yes No Taxable* No+ Yes Yes WY - Wyoming Yes Yes Yes Taxable+ Yes+ Yes No
  10. 10. 10 Exceptions to the Charts ❖ These will be the rules RunSignup follows in Marketplace states ○ There can not be exceptions ❖ Races will have an option to turn on sales tax collection in non-marketplace states ○ Uses standard taxability rules identified by RunSignup ❖ Let us know if you see something off in our taxability matrix. Include specific state statutes and/or rulings (email: kevin@runsignup.com)
  11. 11. 11 How it Works
  12. 12. Who Collects and Remits Sales Tax 12
  13. 13. Summary Reports 13
  14. 14. Under the Covers Architecture 14
  15. 15. Race Setup ❖ For Marketplace States ○ RunSignup will Turn it on ○ RunSignup Collects, Reports and Pays ❖ Non-Marketplace States ○ Race turns it on ○ RunSignup Pays Race ○ Race Reports and Pays State Sales Tax ❖ Set Taxability Address ❖ Map Add-Ons and Giveaways to correct tax code ❖ Set Exemption Status if applicable 15
  16. 16. Exemption ❖ Races will have to complete Exemption Form ❖ Exemptions are variable based on state ❖ We will require explicit acknowledgement and liability for Exempt status for each entity and race ❖ Note - if you are helping a nonprofit by collecting the money into your account, you will not be exempt from sales tax. ○ Same for timers helping races. 16
  17. 17. Release Timeline ❖ Private Beta - Oct. 30 ○ All races will be able to do limited setup, but limited ability to enable ❖ Limited Beta - Nov. 4 ○ Ability for races to set Exemption status ❖ Release 1- Nov. 12-20 ○ RunSignup rolls out collecting in all Marketplace States ○ All races can use the system to collect in non-Marketplace States ○ All nonprofits will be set to Exempt pending confirmation ❖ Final Release - Dec. 15 ○ All Exempt Entities will need to complete their own information ○ All RunSignup types of transactions will be covered - Tickets, Memberships, etc. 17
  18. 18. Questions? 18
  19. 19. 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. 19

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