To learn more about Tax Type and Tax calculations, skip to the "How Tax Rate is Calculated" section of this article.
Where to Locate Tax Rate and Facility Fee
Tax rate and Facility Fee can be set at a venue level in the Org Settings so that any time an event is created with that venue, the Tax Rate and Facility Fee is automatically applied. Just click on the pencil icon to edit the venue's settings from your Venues & Stages list.
On an individual event, Tax Rate and Facility Fee will be listed on the Revenue tab.
Facility fee is a per ticket fee that will be deducted from the ticket Price on every ticket. If a ticket is $30 and the Facility Fee is $2, the Net ticket price will be $28 to be potentially split with the artist. If you prefer to display Facility Fee on top of ticket prices on offers, leave the Facility Fee field as $0 and add to the Deal Terms that Facility Fee will be added on top.
Reminder: Facility Fee will be automatically deducted from the Gross Ticket Revenue on external and internal settlements. If you are a venue or a promoter and you retain the Facility Fee as Revenue, add it as an Additional Internal Revenue line item so that the Internal Settlement considers it as Revenue in your Net Profit.
How Tax Rate is Calculated
There are two ways that Sales Tax could be calculated depending on your State or County requirements. The most common Tax Rate calculation is the Divisor calculation, but in some counties you might use a Multiplier calculation.
If the Divisor Tax Type is selected and a tax rate is entered, tax will be calculated as follows:
(Total Gross minus (Total Facility Fees and Pre-Settlement Fees))minus [(Total Gross minus Total Facility Fees and Pre-Settlement Fees)/((1+(Tax Rate/100))]
Check out the example below using the Divisor Tax Type:
($34,500 - ($1,050+$5,250)) - [($34,500 - ($1,050+$5,250))/((1+(5/100))]= $1,342.86
Why do we calculate tax like this?
It's not uncommon for promoters to mistakenly calculate tax by multiplying the total gross by the tax rate itself.
For example, to calculate the 10% of tax on $1,000, some people will simply enter 1,000 * .10 to get $100. The problem here is that part of the $1,000 has tax built into it, so you need to remove that tax before you calculate the total tax owed - otherwise, you're paying tax on tax.
So in this same example, the proper divisor calculation would be: $1,000 - ($1,000/1.10) = $90.90.
If the Multiplier Tax Type is selected and a tax rate is entered, tax will be calculated as follows:
[Total Gross minus (Total Facility Fees and Pre-Settlement Fees)] * (Tax Rate/100)
Check out the example below using the Multiplier Tax Type:
[$34,500-($1,050+$5,250)]*(5/100) = $1,410
Multiple Tax Calculations
Some cases with multiple tax rates may be able to be addressed with a combination of the Tax Rate plus a Pre-settlement fee. A Percentage of Gross Pre-settlement fee calculation is available on the Tickets tab of every event. The Percentage of Gross Pre-settlement fee is calculated as Total Gross Ticket Revenue - (Total Gross Ticket Revenue/ (1+(Amount/100)), which is similar to the Divisor formula described above. You may be able to add one tax as the event's Sales Tax rate and the other as a pre-settlement fee.
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