Seriously—could sales tax and event taxes in the United States be any more confusing? That was a rhetorical question; the answer is no.
US sales taxes are peak complicated: so we decided to take on the challenge of breaking down how event taxes work for in-person, virtual, and hybrid (with the help of a tax expert). For extra credit, we also made a state-by-state guide of economic nexus thresholds. We hope this is helpful in conceptualizing how taxes will work for different types of events, and for quickly referencing economic nexus thresholds in individual states.
This all being said: please consult with an event tax expert regarding your personal tax needs. We work hard, but the IRS works harder— this document shouldn’t be used as a finite resource for your tax prep.
Now, please enjoy a thrilling ride through the exciting world of event taxes!
Brittany Aleman, Senior Director with Alvarez & Marsal Taxand, LLC
Brittany Aleman, Senior Director with Alvarez & Marsal Taxand, LLC, specializes in sales and use tax matters, including managed audits, reverse audits, audit management and controversy, nexus studies, voluntary disclosure agreements, and tax process reviews.
With more than 10 years of sales and use tax experience, Aleman has worked with clients in a variety of industries, including manufacturing, retail, health care, and oil and gas companies.
Aleman earned her bachelor’s degree in Finance, and her master’s degree in Business Administration, with a concentration in Accounting, from McNeese State University in Lake Charles, LA. She is currently working on her CPA certification and is a certified member of the Institute of Professionals in Taxation.
Back in June 2018, the Supreme Court ruled on the Wayfair decision, which stated that companies no longer need a physical presence in a state to collect and remit sales tax. The new ruling includes both products and services.
With online event registration software being predominantly used to sell event tickets, this will impact event professionals running events in the United States and selling tickets online or via a third-party.
Remember: it’s up to each state to decide when they require an out-of-state company to register, collect, and remit the state sales tax, so don’t forget to vet each state carefully if you’re running an event there. There are different rulings, different thresholds, and different tax rates for each; but on the plus side, we’ve done a little state-by-state research to give you a starting point.
Taxes are incredibly confusing, especially in the United States. The laws vary by state and sometimes even by counties within a state. So we’re going to give you a general rule of thumb to go off of to help you conceptualize how your event taxes might go.
Generally, tangible personal property (TPP) is taxed. So if you’re selling anything tangible such as a t-shirt, it’s generally going to be taxed. With TPP, you’re typically going to be taxed based on the state in which the item(s) will be shipped to vs. what state the item(s) was purchased.
Generally, if you are selling a service, which could include a virtual event, it’s not taxable unless the state says it’s taxable. So services are immediately presumed not taxable unless otherwise stated. Again, this varies state-by-state.
The Wayfair decision made the biggest impact on virtual events; however, due to the economic nexus thresholds being at least $100,000 or 200 transactions (in most states), it’s only going to affect large events.
Let’s break that down. Each state has individual economic nexus requirements, meaning you don’t have to collect and remit sales tax in that state unless the transaction is taxable and total sales are over $100,000 or over 200 transactions. This varies state-by-state, so check our chart below to get an idea of what the requirements are for each state. If you meet the requirements for the economic nexus threshold for that state, then you need to confirm if your service is taxable because you may have a collection responsibility. If you don’t hit the threshold for that state on either gross receipts or transaction amount, then you don’t have to worry about taxability or collection of sales tax for that state.
Still kind of confused? Take this example. Swoogo is hosting a taxable virtual event, and 250 people from Nebraska bought tickets; because Nebraska has an economic nexus transaction threshold of 200, Swoogo will have to collect sales tax from its Nebraska customers once the threshold is met.
Now, let’s say Swoogo also sold 150 tickets to the fine people of Iowa. Swoogo would not have to collect Iowa sales tax because 150 tickets sold didn’t break the economic nexus transaction threshold.
Economic nexus thresholds only apply if there’s no physical presence in the state.
If you have any sort of physical presence in the state, you have to collect sales tax on taxable items and services, regardless of thresholds.
For in-person events, the event will be taxed by the state in which the event is held. So it’s that particular state’s (or sometimes even the particular county within the state) tax laws that apply. Although not all services (e.g., events) are taxable, most TPP (tangible personal property) is, and of course, that’s going to vary state-by-state. Because not all services are taxable, it’s recommended that you always itemize your invoice. Itemizing your invoice allows you to tax only the items in which are deemed taxable (i.e., if the event itself isn’t taxable but the t-shirt is, itemizing the receipt allows you to collect tax on the t-shirt only instead of the entire invoice).
To clarify, the Wayfair decision didn’t really change much for in-person events (it was mostly virtual & hybrid events). In-person events are “comparable” to brick and mortar stores. Because the event is counted as physical presence within a state, taxable items are taxed as usual based on the individual state laws.
Luckily, there aren’t additional tax rules for hybrid events. Hybrid events are in-person events with a virtual component. So, the fees for in-person attendees will be taxed according to the tax laws of the location the event is being held, and the fees for virtual attendees will likely be taxed according to the tax laws of the location of attendees.
Heyo! Don’t you just love when things make sense?!
Corbin Ball, Meeting Technology Speaker & Consultant
If your head is spinning and you’re feeling overwhelmed with the information, we have some good news. Depending on your registration software, it might be done for you.
Industry expert Corbin Ball says, “It will be up to the online registration providers to work this into their systems using sales tax automation programs.”
“Meeting planners will need to make sure the registration system they are using will be fully up to speed with the new laws.”
“Online registration systems need to be fully up to speed with the tax laws.”
There’s a couple of ways in which registration software can help with your event tax headaches. Let’s take Swoogo, for example.
For those companies with events spanning only a few states or countries, you can customize the tax set up. Meaning, within Swoogo, you can set up an itemized invoice, and then you can choose which items are taxable and at which rate. This is a simple, straightforward process.
For the companies having large events whose attendees span multiple states and countries, you may need a more complex solution. Cue Avalara.
Avalara is a tax software platform that helps businesses get event tax compliance right. Swoogo has an Avalara integration that can handle even the most complex tax requirements.
Having a large event spanning 30+ states and multiple countries? No problem! It’s simple to handle with Swoogo’s new integration with Avalara.
Event taxes in the United States are crazy. They vary state-by-state and even sometimes by counties within a state. Due to the complexity of taxes, their ever-changing nature, and harsh violation consequences, we urge you to please consult with a tax professional.
|State||Threshold gross receipts||Threshold transactions|
|Alabama||$250,000||None established to date|
|Alaska||Sales tax determined by local jurisdiction||Sales tax determined by local jurisdiction|
|Arizona||$100,000||None established to date|
|California||$500,000||None established to date|
|Colorado||$100,000||None established to date|
|Delaware||No state sales tax||No state sales tax|
|Florida||None established to date||None established to date|
|Idaho||$100,000||None established to date|
|Kansas||None established to date||None established to date|
|Massachusetts||$100,000||None established to date|
|Mississippi||$250,000||None established to date|
|Missouri||None established to date||None established to date|
|Montana||No state sales tax||No state sales tax|
|New Hampshire||No state sales tax||No state sales tax|
|New Mexico||$100,000||None established to date|
|North Dakota||$100,000||None established to date|
|Oklahoma||$100,000||None established to date|
|Oregon||No state sales tax||No state sales tax|
|Pennsylvania||$100,000||None established to date|
|South Carolina||$100,000||None established to date|
|Tennessee||$100,000||None established to date|
|Texas||$500,000||None established to date|