How to See If Taxes Are Affecting Your Meeting’s Profits

While striving to be thrifty with event budgets, planners might let nicely priced packages drive their decisions on meetings. But if they haven’t assessed their tax needs, they could see an event’s profitability suffer.

Diane Yetter, president and founder of Yetter Tax and the Sales Tax Institute, has spent her entire career talking about taxes. She identifies some of the key tax factors to be aware of when hosting a meeting.

Find Out If the State Has a Sales Tax

It’s not a foregone conclusion that an event will be subject to a state sales tax. In fact, choosing a destination in a state with no such tax can save a bundle right from the start.

The sales tax rate in many states around the country is 6 to 7 percent. “Saving that money is going to potentially make or break their profitability on that event,” Yetter said. “So, looking at states where there is a lower sales tax is absolutely something to do.”

Oregon is one of the few states with no sales tax. Dione Williams, director of convention sales for Travel Portland, said saving the sales tax is almost like having additional budget when hosting an event, and it gives planners flexibility to create memorable experiences for their attendees.

“Some groups have opted to save the sales tax and put it toward the bottom line,” he said. “Many groups increase budgets in other areas, whether they’re enhancing the arrival experience or reception or providing specific amenities for their attendees. It allows you to do a lot more things budgetwise.”

Williams said that not having a sales tax is a direct benefit to attendees, too. “Outside of the conference hours,” he said, “when they’re exploring the destination and they’re shopping and going to restaurants and so forth, they see that savings firsthand.”

Of course, cost savings is only one aspect of choosing the right destination for an event. Williams points to a destination’s amenities, ease of access from the airport, venue availability, and competitive hotel rates as other meaningful factors. “It’s good to let people know about the sales tax,” he said, “but we hear from clients that Portland is an all-around value.”

Figure Out Which Other Taxes Might Apply

Even in states with no sales tax, other state and local taxes might apply.

For example, some resort and major metropolitan areas have tourist-focused taxes such as lodging and meals taxes, Yetter said. There might be airport departure fees, ground transportation service charges, and liquor taxes. Some states have gross receipts taxes that apply to businesses that reach a defined threshold of commercial activity, which larger events might hit. These types of taxes can quickly add to the total cost for planners and attendees.

For planners to have a full understanding of the taxes owed in a particular location, Yetter recommends that they talk to someone at the destination marketing organization but also double-check the information with other sources, such as the state department of revenue. “States have really improved their websites for getting information,” she said.

Know the Taxes for In-Person, Virtual, and Hybrid Events

The tax situation for in-person events can be difficult enough to sort out, but events with a virtual component further complicate the equation. In discussing the differences, Yetter lumps in virtual with hybrid.

“The taxes that you need to worry about are not where the live part of a hybrid event is. You have to worry about where all the users are joining you from,” she said.

“And then, what are you charging for?” Yetter continued. Planners who charge fees to vendors for information access and data processing, for example, might be taxed in many states.

Regardless of whether a state has a sales tax, event organizers may be responsible for collecting taxes on virtual sales of products and services based on where the purchaser is located, thanks to what is called economic nexus, a threshold of purchases or transactions that varies by state.

To make sense of all the tax implications of virtual and hybrid events, Yetter said to lean on professionals, such as the company that created this event planners’ guide to U.S. sales tax, and consider retaining a tax consultant. “We certainly can help people understand where they create nexus and how that is created,” she said. “We can also help people look at the taxability of things.”

Getting the taxes right, including looking at destinations with no state or local sales taxes, such as Portland, can help planners make the most of their event budgets.

“There’s a little bit more flexibility to create that special feeling or that special event, because you know you’re going to have extra dollars that you normally wouldn’t have in a different city,” Williams said. “I think a lot of the delegates will see the difference.”