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.
Thus, if you utilize Kickstarter’s Pledge Manager to fulfill tangible or digital rewards, Kickstarter (through its subsidiary Project Partners, LLC) operates as a Marketplace Facilitator.
What will Kickstarter be responsible for?
Kickstarter’s Pledge Manager utilizes the tax rate provider Avalara to calculate sales and use tax on qualifying orders shipping to backers in the United States, collecting the amount from the backer, and remitting the sales 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 applied to 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 by Kickstarter, including the item categorization and value of the reward.This information will be used by Kickstarter 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 tax on the value of the reward. Kickstarter calculates the amount of tax to impose and processes the collection.
What types of transactions may be subject to sales tax?
Sales 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 not be subject to sales tax, depending on local laws. Typically, only tangible goods necessitate the collecting and remitting of sales tax, but rules differ by jurisdiction.
How will sales tax be managed for my campaign?
Kickstarter will automatically calculate, collect, and remit the applicable sales tax on taxable rewards. As a creator, you don't need to manage the tax collection for US backers. 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, Kickstarter will provide you with reports that show the amount of sales tax collected on your behalf. These can be used to assist with any tax filings you may need to complete.
Do I need to include collected sales tax in my tax filings?
The sales tax that Kickstarter collects and remits 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.