Sales Tax Compliance – Regulations and Updates (a/o 08/25/2021)

Starting January 1st, 2020, 38 states will be holding marketplace facilitators (Amazon, eBay, Wayfair, and race registration providers) liable for collecting and remitting sales tax in Marketplace States. This is due to a supreme court ruling in June of 2018 (South Dakota vs. Wayfair). This court ruling gives states the right to collect and remit sales tax from Marketplace vendors like ChronoTrack. The law is important because it shifts the obligation of the seller to collect and report taxes to the platform that facilitated the transaction. In order to comply with these new laws, we are working with a third-party vendor, Avalara, to collect and pay these taxes on behalf of the event. Since taxes vary by state, we will be using Avalara’s API to apply the correct fees based on the race’s location and the athlete’s location. 

Marketplace Facilitator vs. Marketplace State

A lot of these terms may be new to you. Some of the ones thrown around here are Marketplace Facilitator and Marketplace State. 

A Marketplace Facilitator is a company that works with third parties to conduct the sale of goods and services. Any online system that acts as a platform for the sale of goods falls in this category, including all race registration providers. 

A Marketplace State is a state held responsible for collecting and remitting sales tax. As of right now, there are 36 Marketplace States in the US and it is expected that by the end of 2020 all states that collect sales tax will fall into this category.

Why are we doing this?

Our number one goal is to help races stay compliant when taking payments. As stated above, new laws are holding the vendors who offer payment services liable for paying these taxes. Not following these new laws could leave merchants and events at risk of having to pay back taxes and pay for legal fees. 

What do you need to know?

Each state has different tax laws and pricing on goods and services. This is further complicated by the fact that each municipality within a state can have an approved sales tax that could be different from the state’s sales tax. Beginning January 1st if you are in a marketplace state you will no longer need to collect and remit taxes on payments collected through our platform. These taxes will be collected and remitted through our third-party vendor, Avalara. For customers that are not in marketplace states, we will not be collecting taxes for your event. It will be the responsibility of the event to collect and remit taxes to the state in these instances. To view whether or not your state is considered a marketplace state view the matrix linked below.

There are two item categories that will now be taxed differently:

• Processing Fee Tax (applicable to all Marketplace states, with some exceptions) 
  • Calculated based on the residential zip code of the first Athlete registered (per transaction) for the event, and added to the overall transaction Service Fee 
• Sales Tax – (applicable to all Marketplace States)
  • Based off the zip code of the event state and location itself. Examples:
    • Race Registrations
    • Tickets (i.e. pasta tickets)
    • Goods sold for the event (t-shirts, sweaters, hats)

Using Avalara, we are able to properly tax athletes in Marketplace States based on the location of the race and the location of the athlete where goods are sold.

Please see below for an example of what an athlete will view upon checkout: 

Matrix of Marketplace States

Courtesy of our partner registration provider RunSignup, this Sales Tax Matrix (updated August 2021)lays out more detailed information on whether or not your state is a Marketplace State and what products and services will be taxed. The matrix also outlines which states and organizations are eligible for tax exemptions. We encourage you to follow this link to a downloadable PDF version and share it with your event clients.

Nonprofits

While Nonprofits can be exempt from paying sales tax, this does not preclude them from having to collect sales tax in most states. More details are listed in the tax matrix linked above. If you believe you qualify for these exemptions please send your tax exemption papers to accounting@chronotrack.com so we can exclude your event from collecting these fees.

To view reports on the sales tax that has been collected, you can now view the Fee Details Report and the Net Due Report in CT Live. New columns have been added representing the sales tax fee along with the monies collected.

Who is Avalara?

Avalara is a company that specializes in sales tax and tax compliance regulation so companies like us and their customers don’t have to. Using Avalara’s API we can update the sales totals in real-time. This can account for wherever the event may be or wherever the athlete may be registering. Another service that Avalara provides is filing and remitting taxes to the state-based off on information we collect during the registration for the event. This ensures that things are done correctly from start to finish.  

Support Channels

If you have any questions, comments or concerns regarding the information above, please follow support communication channels applicable to your status: 

Event Directors, please email regsupport@chronotrack.com 

Timers, please email esupport@chronotrack.com

A general FAQ to answer practical questions around your CT Live event can be found on the Knowledge Base HERE.

Additional Information

If you are seeking additional information regarding the new Sales Tax compliance regulations, please visit our registration partner RunSignup’s dedicated blog page HERE. Or check out the work Avalara has published, HERE.