What is a Marketplace Facilitator?
A Marketplace Facilitator is generally defined as a business that contracts with third-party sellers to facilitate the sale of physical and digital goods and services through an online store or marketplace.
Kickstarter's Pledge Manager (through its subsidiary Project Partners, LLC) operates as a marketplace facilitator.
What will Kickstarter be responsible for?
As a marketplace facilitator, Project Partners, LLC has the responsibility to collect and report sales and/or use tax. Project Partners, LLC utilizes the tax rate provider Avalara to calculate sales and/or use tax on qualifying orders shipping to backers in the United States, collect the amount from the backer, and remit the tax to the appropriate taxing authority.
All amounts collected will be available to view in the backer report, and you will receive a breakdown of item-level state and local tax collected from your backers orders within 30 days.
What will creators be responsible for?
Creators are required to provide accurate information about their items as may be requested, including the item categorization and value of the reward.This information will be used to calculate the applicable sales and use tax, if any. You can find more guidance for adding tax information for your items in this article.
What will backers be responsible for?
The backer will be responsible for paying sales and/or use tax on the value of the reward. Project Partners, LLC calculates the amount of tax to impose and processes the collection.
What types of transactions may be subject to sales tax?
Tax could apply to the tangible goods you offer to backers, such as products, printed materials, or art pieces. Non-physical rewards like digital content or services may or may not be subject to sales tax, depending on local laws.
How will sales/use tax be managed for my campaign?
Kickstarter’s Pledge Manager will automatically calculate, collect, and remit the applicable sales and/or use tax on taxable rewards. However, you will be required to properly identify, and provide the cost of, the items that make up your rewards and add-ons. The cost you provide, in combination with the reward and add-on price, will be used by Kickstarter to calculate the amount of sales tax to collect from backers.
Will I receive reports on collected taxes?
Yes, you will be provided with reports that show the amount of sales and/or use tax collected on redeemed rewards, along with any add-ons or upgrades purchased through Kickstarter’s Pledge Manager.
Do I need to include collected sales/use tax in my income tax filings?
The sales/use tax collected though Kickstarter’s Pledge Manager and remitted by Project Partners, LLC does not count as income to you. However, we recommend consulting with a tax professional to ensure you are handling any applicable taxes, such as income taxes on your campaign funds, correctly.
Disclaimer
This guidance is for informational purposes only and does not constitute tax advice. For specific questions about your tax obligations, consult a qualified tax advisor.