When UltraSignup collects and remits sales tax for you (marketplace facilitator) vs when you’re responsible, plus exemptions and key reminders.
Exciting news on the tax front! Many states are hopping aboard the marketplace facilitator train, bringing some changes to how taxes are handled. Good news for most of us, but holdouts include Delaware, Montana, New Hampshire, and Oregon—folks in these states, you're still in charge of handling your own tax filing.
Let's dive into why these marketplace facilitator laws came to be. We'll use the example from TaxJar's article Marketplace Facilitator Laws Explained; Picture Amazon before these laws—each third-party seller had the responsibility of handling their own sales tax. If a seller lacked nexus in a state (think physical location, staff, inventory, or certain transaction thresholds), they skipped collecting sales tax for sales in that state, causing a revenue gap for the state.
Even if a seller had nexus, avoiding compliance meant states had to invest time and resources to chase down non-compliant businesses. That’s a hassle, not to mention a financial drain, for states just to collect their due.
Enter the marketplace facilitator laws, shifting the tax responsibility from the seller to the facilitator (that’s us!). This change streamlines tax collection across entire states, easing compliance efforts for states and ensuring they get their revenue.
So, when does this tax responsibility shift to us? Keep an eye on your pricing page. Once we hit that sales threshold in your state, it switches to "UltraSignup collects and files on your behalf." Until then, it remains your responsibility.
For sellers, this means we handle collecting and remitting sales taxes where our platform complies.
Now, should sellers maintain their sales tax permits when dealing with states with marketplace facilitator laws? Absolutely. Facilitators only manage taxes on transactions through their platform. If you sell items through other channels in a state where we collect taxes, you'll still need permits and might need to file “zero returns” or register for non-reporting status.
It's crucial to stay informed. We’ll detail states with these laws and the essential facts to keep you up-to-date.
As tax season rolls around, expect your 1099-K around January or February. For those in states where we handle tax responsibilities, no more filing for you. We've got you covered.
Quick note: Tax laws evolve fast. While we strive to keep you in the loop, use this as a starting point and consult a sales tax expert for specific questions about your business and economic nexus.
Non-Profit Tax Exemption
Races hosted by a non-profit organization may qualify for sales tax exemption. If you have received official documentation from your state confirming exemption from charging, collecting, and remitting sales tax, please submit a copy of this documentation to our team. Upon review and verification, we will assist in applying the exemption to your events.
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