Your business is going to a trade show or convention, great! You have secured a booth, gotten your promotion materials and staff ready, but are you forgetting something? Did you check if you need to be collecting and remitting sales tax for this event?
Attending a tradeshow or convention may create sales tax problems for your business. The main question businesses need to ask when attending trade shows or conventions is, “Will attending the trade show or convention create substantial nexus in the state and create a sales tax requirement for my business?” Each state has different requirements that create nexus, so it is vital that you find out if attending a tradeshow or convention could create nexus.
Attending Tradeshows or Conventions in Different States
Illinois has a Safe Harbor requirement for out of state business attending trade shows. If you are covered under the Safe Harbor Requirements you do NOT have to register with the state of Illinois.
Safe Harbor Requirements.
An out of State retailer is covered under the safe harbor requirements if:
- The retailer attends no more than 2 Illinois trade shows during any calendar year.
- The retailer is physically present at those 2 Illinois trade shows for an aggregate total of no more than 8 days during any calendar year. Please review the Administrative Code for more details.
- Combined gross receipts from sales made subject to Retailers’ Occupation Tax at all Illinois trade shows during any single calendar year do not exceed $10,000
If you do exceed the safe harbor requirements mentioned above, then you will be required to register for Retailer’s Occupation Tax in Illinois1.
Unfortunately, Florida is taking an aggressive approach toward businesses attending trade shows. Florida claims that even displaying a product or service at trade shows create substantial nexus in Florida.
According to the State of Florida, the presence of independent contractors or salesmen, soliciting business, in a state is sufficient nexus to create sales or use tax obligation on the part of a taxpayer. Scripto v. Carson, 362 U.S. 207 (1960). Participating as an exhibitor at a trade shows constitutes soliciting business, regardless whether any orders are taken or sales are made. Even if you are only taking orders from non-residents at the show, the taxpayer now has nexus in Florida, and it is required to collect tax on its sales to Florida residents.
Any exhibitor who displays tangible personal property or services at a trade show, exhibition, or convention must register as a dealer and collect and report sales tax and surtax on sales of taxable property or services when the written agreement authorizes an exhibitor to make:
- Retail sales in Florida of taxable tangible personal property or services; or
- Mail-order sales of taxable tangible personal property or services to Florida customers2.
In California, a retailer is not a “retailer engaged in business in the state”, if their physical presence is solely based on attending a trade show or convention in the state.
You will be liable to register with the state if:
- Except as provided in this subdivision, a retailer is not a “retailer engaged in business in this state” under paragraph (2) of subdivision (c) if that retailer’s sole physical presence in this state is to engage in convention and trade show activities as described in Section 513(d)(3)(A) of the Internal Revenue Code, and,
- If the retailer, including any of his or her representatives, agents, salespersons, canvassers, independent contractors, or solicitors, does not engage in those convention and trade show activities for more than 15 days, in whole or in part, in this state during any 12-month period and,
- Did not derive more than one hundred thousand dollars (100,000) of net income from those activities in this state during the prior calendar year.
New York has taken a different approach then other states about attending trade shows or conventions. The state will require you to register and collect sales tax for any orders taken at the trade show or convention. You will not be required to register and collect tax if your only presence at the trade show or convention is participating in the trade show and not making any sales during the event and orders are sent outside the state for approval and fulfillment3,4.
Nevada’s approach to attending trade shows or conventions in the state requires you to submit a “One Time Sales Tax Return”, at the end of the trade show for any orders taken or sales made during the event. Nevada states that you need to contact your promoter to find out if you will be conducting sales of tangible personal products at the event. If you qualify to transact sales of tangible personal products, then the promoter is responsible for providing the “One Time Sales Tax Return”, to the vendors. Although, you can submit the one-time sales tax return, but if you attend more than two events in Nevada during a twelve-month period, you will be required to register with the state to obtain a Sales Tax Permit5.
- “Administrative Code Title 86: Revenue Chapter I: Department of Revenue Part 150 Use Tax Section 150.802 Trade Show Appearances.” Illinois General Assembly Home Page, ilga.gov/commission/jcar/admincode/086/086001500G08020R.html.
- “Sales and Use Tax on Trade Show and Convention Exhibitors.” Florida Department of Revenue, floridarevenue.com/Forms_library/current/gt800040.pdf.
- “State of New York, Commissioner of Tax and Finance, Advisory Option Petition No. S960529B.” New York State Department of Taxation and Finance, TSB-A-96(62)S
- “State of New York, Commissioner of Tax and Finance, Advisory Option Petition No. S961022C .” New York State Department of Taxation and Finance, TSB-A-96(83)S
- “Instructions and Application, One-Time Special Events Permits” State of Nevada Department of Taxation, https://tax.nv.gov/uploadedFiles/taxnvgov/Content/Forms/One%20Time%20Instructions.pdf