New tax regulations? Didn't we just have this GDPR thing going on?
GDPR scared the event marketing world and now you're worried that another new regulation might impact the way you run your events? Don't be. The new regulation is brand new and we spent some time to find out everything there is to it so you don't have to.
"But you are an event software company?"
Yes we are. In fact, we know Jack about the new US sales tax rulings and regulations. Sometimes, you need some experts in your life. And that's why we brought in Stephen Cummings, our own accountant, who runs Nomad Financial, a financial company dedicated to helping start-ups like Swoogo.
And despite the tax topic being as dry as sand in the desert, we've decided to put together the 6 most asked questions from our August Webinar How The New US Tax Rulings Will Affect Your Events with Stephen.
1) Tell Me About This New US Tax Thing?
In June 2018, the Supreme Court decided on the Wayfair court case. Don't worry if you never heard of that case. I found a Forbes article that explains the case in much more detail (better than we could to be precise)
Basically, the decision states that companies no longer need to have a physical presence in the state they're running their event in to collect and remit sales tax from its customers. Important to keep in mind, that this involves both, products & services.
Back in the past, online retailers got away with not collecting taxes when they didn't have a local presence in the state they're selling in. Lucky beggars.
But it's all changing now.
2) How Does The New Sales Tax Affect Events?
The moment you're selling your conference tickets online through event registration software you're essentially falling under the category "online retailer".
Furthermore, you don't even have to be selling directly. Even if you're using a third-party service or affiliate partners to sell tickets for you, some states might require you to collect and remit sales taxes moving forward.
But it's not all doom & gloom.
You need to exceed an annual revenue threshold or transactions per month and you can find an overview of those thresholds in our Free US Sales Tax Guide For Events.
3) Does The New Law Affect Every State?
Nope. Currently, there are only 45 states collecting the new sales tax.
To be fair, many of those states would benefit from some extra Buckaroos in their pocket.
The Supreme Court stated that it's up to each individual state to determine what items & services are taxable and at what tax rate.
But it even gets more complex. Every county can decide on their own tax rates too.
In total, this means there are now over 5,000+ different tax rates in the US alone.
4) Does The New US Tax Law Affect Every Event?
That's a tricky questions and the short answer is "it depends".
Because we didn't find much online, we've decided to email a couple of states to inquire about the tax rates.
Here's the response from Louisiana state revenue & taxes, for example:
We also waded through a bunch of pretty boring state tax documents and it's often a definition thing.
It also depends on the size of the event (number of transactions, e.g registrations AND/OR annual revenue) and if you're running your event only once or repeatedly.
The best thing really, and I know this is not really helpful, is to check out the regulations on each state's website.
Additionally, it's also best to consult with your accounting department or tax advisor. Or you simply email the revenue state department like we did above.
5) What About Event Businesses Outside The US?
Similar to the VAT (Value Added Tax) added to US citizens attending events in the United Kingdom collecting and remitting sales & use tax might also be required from event planners outside the US.
But there are tax treaties too, so the best way to explore this are is to stay tuned and observe any updates.
Here at Swoogo, we'll try to keep on top of the developments for you and provide updates as soon as we hear anything.
6) And What About Selling Event Packages?
Often, you're selling additional items as part of your conference & event. Think about gala dinners, books or t-shirts.
You need to check on the state's website to see what items are taxable and which ones are not.
For example, if you're selling event tickets with merchandise included and that merchandise item is taxable in that state, then the entire invoice amount becomes taxable.
You don't want that, because it can get pricey.
If you're selling a US$ 1,000 conference package which might include a book and a t-shirt and books and t-shirts are taxable in that state, you need a breakdown of those items on your invoice.
Corbin Ball (@CorbinBall) anticipates that when the new US state tax rulings fully come into effect, event planners need to make sure that the registration software they're using are fully up to speed with the new laws.
The bottom line is that event registration providers need at least to be able to split merchandise from event line items on the attendee's invoice.
Last, but not least...
It's important to remember that you're paying the tax to the state in which you're holding the event, not where the attendee registers from.
- Know which states collect sales tax and for which items & events. The thresholds range between US$ 100,000 in annual revenue and/or 200 transactions
- International events businesses might be safe, but tax treaties are currently being evaluated
- Read about the sales tax nexus in the state you're running your event in
- Consult with a tax expert on an individual basis to discuss if you're event is affected
Disclaimer: This area of law is changing rapidly. While we strive to keep this information up to date, please use it as a guideline only and consult with a tax expert on your individual case.