This article details how U.S. sales tax is applied to product sales on the Teachable Platform. It also covers how Teachable is supporting creators, and some frequently asked questions around sales tax.
NOTE: These are general recommendations. Teachable cannot give tax or financial advice and is not liable for any losses or tax liabilities due to actions taken (or not taken) based on these recommendations. Always consult a local tax professional when planning your taxes.
Overview
U.S. laws around sales tax have been evolving rapidly over the last few years. Among other changes, these laws generally require central marketplaces like Teachable (rather than individual sellers using these marketplaces) to collect and remit sales tax to government authorities. These pieces of sales tax laws are known as “marketplace facilitator laws”.
These laws are complex and vary from state to state. Additionally, not every state has passed these laws. Fortunately, Teachable has worked hard to institute the required changes and to make sales tax as easy as possible for our creators.
Who is affected?
The information in this article applies to any creator with sales in the US. EU/UK VAT is handled separately.
Like EU/UK VAT, U.S. Sales tax is applied based on where your students are located. So even if you’re not based in the U.S., these changes are still relevant if you sell to students in the United States.
How is Teachable supporting me as a creator?
If you’re a creator using teachable:pay or Monthly Payment Gateway, Teachable will automatically calculate, collect and remit U.S. sales tax on the sales of your school's products to the relevant state authorities, where applicable.
If you’re a creator using a Custom Payment Gateway, Teachable will not charge or collect sales tax on your sales. Please consult with your accountant on how to proceed. Or you can switch to one of our native payment gateways to have this process automated. Learn more about our payment gateways here.
Application of sales tax through the payment gateways:
|
Payment Gateway |
Process |
|
teachable:pay |
Teachable will automatically calculate, collect and remit sales tax depending on the student’s location. |
|
Monthly Payment Gateway |
Teachable will automatically calculate, collect and remit sales tax depending on the student’s location. |
|
Custom Payment Gateway |
School owners must calculate, collect and remit taxes themselves. |
How will this impact my students?
It depends on where your students are located.
U.S. sales tax is applied at the state level, and states have different laws about which products and services are considered taxable in the state. For example, some states tax video streaming services while others do not. Individual states also choose their own tax rates.
This means that whether sales tax will be applied to your student’s purchase will depend on your student’s location. The same is true for the tax rate that will apply.
Frequently asked questions
Where does the tax appear in a sale?
Sales tax, if applicable, will appear in the checkout page as a separate line item (shown below), and on the student’s receipt.
I'm part of non-profit, tax-exempt organization. Can I prevent sales tax from being collected on product purchases?
Yes. School owners from tax-exempt organizations should submit proof of their tax-exempt, non-profit status by logging in and contacting Teachable Support with a request to have product-level exemptions added.
How are students that purchase products as a tax-exempt organization handled?
Similarly to subscription purchases, if your student intends to purchase your content as a business, and the business qualifies for a sales tax exemption, your student will need to provide Teachable with a tax exemption certificate issued by the state in which they are located.
Students from tax-exempt organizations who purchase products or services on the Teachable platform should submit a refund request by logging in and contacting Teachable Support. The refund request should include a copy of the purchase receipt showing the sales tax paid and Order ID, as well as a copy of their state sales tax exemption certificate. Teachable will issue a refund once the documentation has been reviewed and approved. Usually the process takes about 7 days.
NOTE: Each state has its own Exempt Organization Certificate form.
Why is Teachable charging sales tax in some states but not others?
State laws vary on whether sales tax must be collected and remitted or not.
In states that apply sales tax to the types of products and services sold through the Teachable Platform, we will charge sales tax.
Can I include US sales tax with my product price to show a single, all-inclusive price?
Yes. You can choose to display your product pricing as either tax-inclusive, where the total price already includes the applicable taxes, or tax-exclusive, where tax is applied on top of the product price. Learn more about setting up tax-inclusive pricing in your school.
How will existing student subscriptions be treated for students who enrolled before sales tax rolled out?
Sales tax will be applied to subscription payments as of the date that sales tax goes live in the state. Sales tax will not be applied on a retroactive basis.
Students who don’t have a shipping address on file will be presented with a dialog box after login directing them to a new page where they will input their delivery address. Students will be presented with this dialog box and experience each time they login until they supply a delivery address.
How is sales tax calculated with coupons?
Sales tax is based on the sale price; whatever the final checkout price is, that is the taxable amount. For example, if the course is $100 and the student has a -$20 off coupon, the taxable amount is $80.
Do refunds include sales tax?
Yes.
Why do you need a shipping address?
US sales taxes vary by jurisdiction. Because of this, we need the student’s full address to determine the tax laws that apply.
How can I see how much sales tax Teachable has collected and remitted on my sales?
On the Teachable platform, go to the Sales area and you’ll see a list of transactions completed. Click “Export CSV” in the upper right-hand corner and you will be emailed a transaction report that lists information such as address, net price and sales tax fees. This report can then be downloaded into your tool of choice - Google Sheets, Excel, or pdf for your bookkeeping purposes.
States where we apply sales tax
| Alabama Arkansas Arizona Colorado Connecticut District of Columbia (DC) Hawaii Iowa Kentucky Louisiana |
Maine |
Rhode Island |