Running an event requires monitoring dozens of details, from scheduling concerns to health and safety requirements. It’s easy to miss small details such as sales taxes in the shuffle.
However, collecting the sales tax is a critical part of many events. Most states require vendors to collect the sales tax in one way or another, so you may need to collect it on the tickets you sell.
That’s why you need to prepare in advance. It’s important to note that sales tax laws are constantly changing, so checking regularly for updates in your state is recommended. Here’s what you need to know about event sales taxes, tax reporting, state tax laws, and how to collect the sales tax the right way.
Why You Need to Collect the Sales Tax for Events
Most states collect sales taxes in one form or another. The sales tax is a crucial revenue stream for state governments, so they pursue these tax payments heavily.
That’s why appropriate tax reporting is so important for your event. State governments place heavy penalties on businesses and events that don’t collect and remit the relevant sales taxes.
Failing to collect the proper event taxes could put your business on the hook for legal consequences such as back-tax interest payments and fines. As a result, managing your sales tax liability has become an integral part of running successful events.
Sales Tax Laws for Events: An Overview
The problem with collecting sales taxes is that these taxes are different in every state. They can be broken down into three basic categories:
- State sales taxes
- County sales taxes
- Municipal sales taxes
Every level of government can institute its own sales tax regulations at its own rates on different items. Typically, state taxes are the highest, followed by county and municipal taxes. You will need to track all three types for your location to collect and remit the appropriate taxes for the respective governments.
For businesses in multiple states, it’s important to ensure you are aware of the new rates and how they could impact your sales tax calculations and compliance.
Not every item is subject to the same taxes, either. Here’s a brief overview of taxable items as well as some event tax exemptions.
- Tickets: Tickets to for-profit events are almost always subject to the sales tax.
- Food: Most states consider food sold at events to be a non-grocery item, and therefore, it is subject to the sales tax.
- Alcohol: Alcoholic beverages are subject to not only the sales tax in many states but also an additional alcohol tax.
- Souvenirs: Shirts, posters, arts and crafts, and other items sold by vendors are almost always subject to merchandise sales taxes.
- Full list of tax categories on Events.com here.
- Event fees: Some event fees may not be taxable, depending on your state. Event fees such as processing charges are typically exempt.
- Certain products: Sometimes, arts and crafts or food may not be taxable. For instance, certain states consider arts and crafts to be exempt from taxes if they are sold by someone over the age of 65 as a part-time hobby.
- Items purchased by nonprofits: Tickets may be exempt from the sales tax if you’re specifically selling tickets to a nonprofit event.
- Charity sales: If you’re selling tickets or items and donating all of the proceeds to charity, then you may be legally accepting donations instead of making sales, thereby exempting yourself from the sales tax.
Regardless of where your company is located, the in-person sales tax rate is determined by the location of your event. However, online sales taxes are more complicated.
For online purchases, the sales tax is typically paid to the location where the ticket was purchased, not the place from which it was sold. For example, if someone buys a ticket to an event in New York but lives in Wisconsin, Wisconsin will receive the sales tax for that ticket. The specific details are typically managed by marketplace state laws.
What Is a Marketplace State?
Some states have decided to shift the sales tax burden from individual sellers to marketplaces. These are known as “marketplace states.” Retailers in larger online marketplaces aren’t responsible for charging a sales tax and remitting it to the government in a marketplace state. Instead, the marketplace facilitator is responsible.
These laws are a reaction to Amazon’s habit of not charging a sales tax on third-party items. The regulations require seller platforms such as Amazon to collect sales taxes alongside the funds they gather for third-party retailers. However, the regulations affect other marketplaces, too.
For instance, platforms that allow multiple events to sell tickets may be considered marketplace facilitators. Similarly, if your event offers an independent, multi-vendor online store, you may be a marketplace facilitator.
Currently, all states except Oregon, Montana, New Hampshire, and Delaware have marketplace tax regulations in place. The best way to learn whether you’re responsible for marketplace sales tax remittance is to look up the rules in the state in which you’re holding your event or work with a platform that’s already a marketplace facilitator.
Online Event Sales Tax Reporting
To correctly manage your event sales taxes, you need to collect and report a lot of information. Details you need to gather for each sale include:
- Purchase amount
- Buyer name
- Buyer ZIP code
These details allow you to determine exactly where the sales tax must be submitted. However, if you’re selling to people around the country, it can quickly get out of hand, with hundreds of counties and municipalities to consider.
How Events.com Can Help
This tool will automatically calculate, collect, file, and remit the sales tax or tax on the total amount charged to the attendee in certain states or cities. Simply put, Events.com manages all of the sales tax concerns on your behalf so you can focus on organizing your event.
Stop Worrying About Sales Taxes With Events.com
Sales tax is a significant concern for many event organizers, but it doesn’t have to be. Events.com makes it easy for you to manage the complexities of sales taxes. The platform will collect and send the appropriate sales taxes and manage marketplace state compliance for you.
As we roll out our new sales tax system, we will be listening to your feedback and concerns. Events.com will calculate, collect and file sales taxes due on your behalf. However, and most importantly, Events.com does not provide tax, legal or accounting advice; if you have questions about the implications and effects of our new sales tax system on your business, you should discuss these concerns with your tax professional and/or a tax attorney. 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. Events.com makes no representations, warranties, or assurance as to the accuracy, currency or completeness of the information provided in this email. Accordingly, you are solely responsible for any inaccuracies, late fees, interest payments, and other tax implications that arise due to such tax system. As such, you agree to indemnify and hold harmless Events.com and its Providers and each of their respective current and former directors, officers, founders, employees, agents, assigns and any other person for whom it is in law responsible from and against any and all expenses, damages, claims, suits, losses or actions (“Claims”) brought against Events.com and its Providers, including but not limited to Claims with respect to such Sales Tax decisions, charges, fees, and implications. You will be automatically enrolled in Events.com’s tax system and authorize Events.com to calculate and pay your sales taxes on your behalf. If you wish to opt-out of such system, please or contact Events.com at firstname.lastname@example.org.