Boost recurring donations this giving season with the upsell prompt!With the Auctions app, a bidder's checkout works out the sales tax they owe and the part of their payment that is tax-deductible, using each item's Fair Market Value. Knowing how these figures are calculated helps you set values that give bidders accurate checkouts and receipts.
Important: Soapbox calculates these figures from the values you enter. It does not give tax advice. Confirm your sales tax obligations, and how you value donated items, with your tax advisor.
What is taxed
Sales tax applies to:
- Won silent and live bidding items
- Fixed price purchases
Paddle raise pledges and processing fees are never taxed.
How sales tax is worked out
Tax is charged on the items' fair market value, not on the price paid.
- For a won item, the taxable amount is the item's Fair Market Value.
- For a fixed price purchase, it is the Fair Market Value multiplied by the quantity bought.
- An item with no Fair Market Value adds nothing taxable.
The fair market values of all the bidder's taxable items are added together. The auction's Sales Tax Rate is applied to that total, and the result is rounded to the nearest cent. It appears as a single line on the bidder's checkout, named with your Sales Tax Label. If the rate is 0, or no taxable item has a value, no tax line appears.
How the deductible amount is worked out
For each line on the checkout, the tax-deductible amount is what the bidder paid minus the fair market value.
- It is never less than zero. A bidder who pays less than an item's value has no deductible amount for that item.
- An item with no Fair Market Value is shown as fully deductible.
- A paddle raise pledge is fully deductible.
- Sales tax and processing fees are never part of the deductible amount.
A worked example
An auction's Sales Tax Rate is 6.35%. One bidder's checkout has the following lines:
| Line | Paid | Fair market value | Taxable | Deductible |
|---|---|---|---|---|
| Weekend getaway (silent auction win) | $500.00 | $300.00 | $300.00 | $200.00 |
| Signed guitar (live auction win) | $150.00 | $200.00 | $200.00 | $0.00 |
| Wine tasting ticket ×2 (fixed price, $40 each, value $12 each) | $80.00 | $24.00 | $24.00 | $56.00 |
| Paddle raise pledge | $250.00 | none | not taxed | $250.00 |
| Total | $980.00 | $524.00 | $524.00 | $506.00 |
- Sales tax is $524.00 × 6.35% = $33.274, rounded to $33.27.
- The bidder's checkout total is $980.00 + $33.27 = $1,013.27.
- The tax-deductible amount is $506.00.
The signed guitar sold for less than its value, so it is still taxed on its $200.00 value, but none of its price is deductible.
Where bidders see these figures
On the bidder's checkout page:
- Each line shows "Fair market value" and "tax-deductible" amounts, or "Fully tax-deductible".
- The totals include Fair market value received and Estimated tax-deductible, beneath the balance due.
On the receipt emailed when the bidder pays in full:
- Fair market value and Deductible columns for each line.
- A For your tax records statement, for example: "The estimated fair market value of the items you received is $524.00. Your tax-deductible contribution is limited to the amount you paid above that value: $506.00."
To leave these columns and the statement off receipts, set Show Fair Market Value on Receipts to No. This affects only the emailed receipt. The checkout page always shows the figures.
Things to know
- Display FMV as Priceless changes only what bidders see on the item page. The checkout still uses the Fair Market Value you enter. If you want the receipt to show a deductible amount below the full price, enter a value.
- If your team adjusts a line's amount or fair market value on a bidder's checkout, the sales tax and deductible amount are recalculated.
- Shipping Cost is not added to the checkout, and it is not taxed.
Setting the rate and values
To set the sales tax rate and label for every auction:
- In the administrator, go to Auctions → Configuration.
- On the Checkout & Settlement tab, for Sales Tax Rate, enter the percentage, for example 6.35. Enter 0 for no tax.
- For Sales Tax Label, enter the name bidders should see, for example "Sales tax".
- Click Save.
To use a different rate for one auction, set Sales Tax Rate in the auction's Settlement Configuration section on its Details tab. See Configuring checkout and settlement settings.
To set an item's value:
- Open the Auctions Manager.
- Click the title of the auction.
- Click the Items tab.
- Open the item.
- For Fair Market Value, enter the item's value. For a fixed price item, enter the value of one unit.
- Click Save.
Note: Before your event, check that every item has a Fair Market Value. An item left blank carries no sales tax, and its whole price is shown to the winner as tax-deductible.
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