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Required U.S. sales tax to be collected on products and services beginning September 1st

Community Manager
Lena E Community Manager Member Since: Apr 7, 2015
1 of 6

For freelancers and clients located in the US, Upwork is now required to collect a sales tax on Upwork products and services if you live in one of the following states: Connecticut, Massachusetts, New York, Ohio, Pennsylvania, or Texas. 

This will apply to services including Connects, membership fees, and payment processing fees. This DOES NOT apply to freelancers Upwork contracts and the amount billed to clients. 

 

Here are some examples of how this is calculated:

 

Freelancer Plus is a monthly subscription for $14.99 (USD). You live in the state of Ohio which has a state sales tax of 5.75% and you have a Plus membership. Starting August 1st, you will be billed $14.99 + tax (.86 cents) = $15.85

 

Connects cost $0.15 (USD) each and are sold in bundles of 10, 20, 40, 60, and 80. You want to buy 10 Connects and you live in the state of Connecticut with a 6.35% sales tax. Starting August 1st, you will be billed $1.50 for the 10 Connects + tax (.10 cents) = $1.60

 

Products and Services that will include a sales tax starting September 1st:

Client Products and Fees

 

  • Client Membership Fees
  • Premium Job Posts
  • Payment Processing Fees
  • Enterprise Billing Fees
  • Enterprise Service Fees
  • Enterprise Subscription Fees
  • Conversion Fee

Freelancer and Agency Products and Fees

 

  • Membership Fees
  • Connect Fees

 

Because Upwork is an online business, sales tax on Upwork products and services are only applicable in certain states. Currently, these six states are Connecticut, Massachusetts, New York, Ohio, Pennsylvania, and Texas. Our effort to collect sales taxes begins on Sept. 1 and you may not see these taxes charged immediately. Don’t worry, you’ll only pay once we start collecting and we won’t charge you retroactively. We will update customers if additional states require us to collect these taxes. All taxes collected by Upwork will be passed on to your state government. To learn more, visit this Help article. 

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Active Member
Klaudia K Member Since: Aug 20, 2020
2 of 6

My organization is a large non-profit, will we have to pay sales tax to independent contractors?

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Moderator
Valeria K Moderator Member Since: Mar 6, 2014
3 of 6
Hi Klaudia,
 
Sales taxes, depending on your state, may be charged on:
  • Membership fees          
  • Conversion fees (this is the fee you pay if you move a relationship off of Upwork)
  • Featured Jobs fees 
You are not charged a sales tax on the service fees you pay to freelancers.
~ Valeria
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Active Member
Samantha Ann R Member Since: Sep 5, 2019
4 of 6

Hi, I sent an email about this and never heard anything back. I recieved an email saying this would apply to me but I am not in the US - nor have I ever been. I am a bit concerned that Upwork considers me "located" in the US. 

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Moderator
Vladimir G Moderator Member Since: Oct 31, 2014
5 of 6

Samantha,

 

Thanks for posting your concern in the Community. Could you please click on my photo or name > select the Message button and share with me a screenshot of the email you mentioned receiving in a private message? I'd like to take a look and follow up with an update.

 

By chance, are you possibly referring to the GST charge applied on the service fee that you're seeing on your end?

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Active Member
Samantha Ann R Member Since: Sep 5, 2019
6 of 6

Thanks for taking a look, I have messaged you. Definitely not the GST, the email specifically refers to US Sales Tax. 

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