Many businesses are unaware the certain trade show activities trigger sales tax liability. If you’re traveling to a trade show in Texas, Nevada, Florida, Illinois, California, or one of many other states, you might have to file sales tax in that state. Here are a few questions to ask yourself to measure potential liability:
Do you sell goods or services at trade shows?
Whether or not you try and sell goods or services at a trade show is the number one factor in determining if you have nexus. In some states, simply having a sales person at a trade show is enough to give you a tax obligation. Take Illinois: any out-of-state retailer occasionally attending trade shows in the state with “. . . any kind of order-soliciting or order-taking representative . . . must collect and remit the Use Tax….”
In Florida, trade show exhibitors need to register as sales and use tax dealers if their exhibitor agreement didn’t prohibit them from making or offering to make:
- Sales of taxable goods or services.
- Sales of taxable goods or services without obtaining a signed copy of the purchaser’s Annual Resale Certificate (Form DR-13).
- Mail-order sales of taxable goods to Florida customers.
How much time do you spend at trade shows?
A second factor is how much time your company spends at trade shows in a particular state over the course of a year. Some states use this to determine whether or not you have nexus there. For instance, in California you do not have a sales tax obligation if the following are true:
- You engage in trade show activities for no more than 15 days (in whole or in part) during any 12 month period; and
- You “. . . did not derive more than one hundred thousand dollars ($100,000) of net income from those activities….”
How many sales do you make via trade shows?
This can also influence whether your trade show trips trigger sales tax liability. In the state of Texas, you must obtain a Texas Sales and Use Tax Permit if you:
- Sell taxable items or taxable services; or
- Take orders for taxable items or taxable services; or
- Use the show to promote sales of taxable items or taxable services.