Tour operators and DMCs manage financial structures that are far more complicated than most other travel businesses. You deal with supplier deposits, multi-currency pricing, seasonal booking cycles and payment flows that rarely move in a straight line. The result is a constant pressure on margins, cash flow and financial reporting. At Antravia, we work with operators, wholesalers and DMCs across global markets, and we see the same challenges appear every season. This series breaks down the financial issues that matter most and explains how to manage them with clearer reporting and stronger controls.
See our dedicataed page for Tour Operators here

Sales Tax for U.S. Tour Operators: 2025 Compliance Guide

Also see our dedicated US Sales Tax page

Sales tax obligations for tour operators have changed dramatically since the Wayfair decision, and the 2025 environment is the most complex the industry has ever faced. States now have broad authority to tax remote operators, and travel-related transactions, such as bundled packages, create exposure in states where many operators do not realise they have nexus. With domestic travel spending projected to reach $1.35 trillion in 2025, and state tax departments increasing enforcement, the sector faces both opportunity and heightened compliance risk.

This guide provides a practical, informed explanation of where liability arises, which services states tax, and how operators can protect themselves through registration, evidence, and consistent documentation.

1. The Evolution of Sales Tax Nexus: From Physical Presence to Economic Presence

The Wayfair ruling fundamentally changed nexus rules. Prior to 2018, states could only require sales tax collection if an operator had physical presence, so employees, offices, inventory, guides, or other in-state activities. Wayfair removed this restriction and allowed states to impose collection obligations based purely on economic activity.

This shift affects tour operators immediately because most sell experiences across state lines with no physical presence. A Florida operator selling a California wine tour, or a national hiking brand selling multi-state itineraries, can easily exceed a state’s economic nexus threshold despite never setting foot there.

Many operators underestimate how quickly nexus arises. Consider the following practical examples:

Employees or Contractors in Any State
One permanently based guide in Colorado creates Colorado nexus, even if your company is headquartered in Maine.

Equipment and Inventory
Storing kayaks in Utah or maintaining e-bikes in Oregon creates undeniable physical presence.

Attending Events
Even short appearances at trade shows or consumer travel events can create nexus depending on the state.

Affiliate or Partner Marketing
Paying commissions to bloggers, influencers, or lodging partners located in a state can qualify as affiliate nexus.

Alongside these traditional triggers, economic nexus now applies in every sales-taxing state. Most states use a threshold of roughly $100,000 in annual sales; some also used transaction counts, though several states are beginning to eliminate the “200-transaction” test.

In reality, many tour operators have nexus in five or more states without realising it. Once a threshold is crossed, states expect immediate registration. Failure to register promptly may lead to back taxes, penalties, and negligence assessments of up to 25%.

Digital-first operators are particularly exposed. A single viral campaign or an OTA partnership can push an operator into nexus territory long before internal systems pick it up.

2. Taxable vs. Exempt Services: Understanding which Activities are Taxable

Tour operators rarely sell simple, single-purpose items. Most products are bundled packages that include accommodation, meals, admissions, transportation, activities, and guide services. States differ considerably in how they tax these components.

Three core principles shape the analysis:

1. Sourcing
Sales tax generally applies where the traveller receives the benefit of the service. A New York operator selling a Chicago architecture tour must collect Illinois tax, not New York tax. Multi-state itineraries may require allocating tax by state.

2. Bundling
If the elements of a package cannot be separated, many states tax the entire price based on the dominant component. If the elements are separable, operators must allocate the package price to each component in a reasonable manner. A $2,500 package that includes lodging, transportation, and guide services may require separate valuation for each component.

3. Documentation
Clear, consistent invoices are essential. Without proper documentation, auditors often treat the entire package as taxable.

Tour operators typically encounter six categories of taxable elements:

Guided or Recreational Activities
Many states classify guided hikes, walking tours, and excursions as taxable amusement or recreation services.

Event Admissions
Festival tickets, museum admission, or entertainment portions of itineraries are almost always taxable.

Transportation
Interstate transportation is exempt under federal rules, but in-state transportation—bus, van, ferry, or shuttle—may be taxable depending on local law.

Meals
Prepared food is taxable in most states. Even if meals are part of a bundled itinerary, operators may need to allocate their value and apply tax.

Merchandise and Souvenirs
Tangible personal property is taxable unless a resale certificate applies.

Lodging Taxes
Hotels, cabins, and short-term rentals have state and local lodging taxes, which often exceed 10–15%. Merchant-of-record models typically shift the obligation to the tour operator.

Certain exemptions exist, such as standalone itinerary design services or educational trips sold through accredited institutions, but they require proper documentation. Missing or incomplete resale certificates are one of the most common causes of audit adjustments.

3. Registration, Collection, and Filing: How Tour Operators stay Compliant

Once nexus is established, an operator must register, and often within 30 to 90 days depending on state instructions. A structured process helps manage compliance:

Assess your Nexus Footprint
Export sales data from booking systems like FareHarbor, Rezdy, or your CRM. Review prior-year and current-year sales by state to identify where thresholds have already been exceeded.

Register Before a State Contacts You
Voluntary registration is almost always cheaper than responding to a notice. Some states permit direct online registration; others allow multistate registration through the Streamlined Sales Tax (SST) system.

Begin Charging the Correct Tax
Operators must collect state and local rates accurately. Using geolocation or integrated tax software reduces errors and ensures the correct local surtaxes are applied.

File Returns on Time
Filing frequency depends on liability. Monthly filing is common for larger operators; quarterly or annual filing may apply to smaller ones. Some states impose penalties even if no tax is due.

Maintain at Least Four Years of Records
Booking confirmations, receipts, exemption certificates, route logs, and contracts all form part of the audit trail. States regularly request these during examinations.

A rafting operator we assisted previously filed 24 separate returns each month. By restructuring via the SST system, they consolidated their obligations to eight filings, reducing administrative costs by more than $10,000 annually.

4. Audit Risks and how to Protect your Business

Sales tax audits are rising nationwide. In 2025, the Multistate Tax Commission (MTC) is coordinating joint audits focusing on travel-related businesses and companies using digital booking systems. Common audit triggers include:

A High Proportion of Exempt Sales
If more than 20% of sales are classified as exempt without strong documentation, states frequently initiate review.

Bundling Errors
Operators sometimes tax only their margin or markup, but many states expect tax on the full package unless allocation is supported.

Failure to Recognise Economic Nexus
“We don’t have employees there” is not a defence after Wayfair.

Data Mismatches
States compare reported revenue with 1099-K data, OTA reports, and marketplace filings.

Irregular Filing Patterns
Frequent zero returns, sporadic amendments, or large refund claims draw attention.

Strong defences include clean and consistent records, annual nexus reviews, internal mock audits, and the use of voluntary disclosure programmes before states initiate contact. These programmes can reduce penalties, limit look-back periods, and significantly reduce liability.

5. Technology Tools that Reduce Compliance Burden

Sales tax compliance is now too complex for manual spreadsheets. Modern systems integrate directly with booking platforms, calculate accurate real-time rates, track nexus, and automate return filing. Common tools used by tour operators include:

• Avalara for lodging tax and sales tax automation

• TaxJar for multi-channel sellers

• TaxCloud for SST states and simple nexus tracking

• Sovos for larger operators with mixed U.S. and international tax exposure

• Anrok for operators selling digital, SaaS, or hybrid travel experiences

The most efficient arrangements connect these tools directly to booking engines or payment processors, ensuring consistent tax treatment from the moment a booking is made.

6. A Practical 2025 Compliance Calendar for Tour Operators

January
Review prior-year sales data and identify states where nexus thresholds were met. Register in new states before opening seasonal sales.

March
Submit Q4 filings, update exemption certificates, and refresh internal documentation.

June
Run a mid-year nexus scan and renew SST certifications where applicable.

September
Conduct pre-audit checks and ensure software reflects new rates that take effect on October 1 in many jurisdictions.

December
Prepare year-end sales summaries. If you are out of compliance in any state, consider voluntary disclosure before year end to limit historical liability.

How Antravia helps Tour Operators stay Compliant

Antravia specialises in the accounting and tax challenges that most tour operators and travel brands struggle with, particularly when it comes to multistate U.S. sales tax. We combine sector-specific knowledge with a practical understanding of how operators sell, across OTAs, booking platforms, digital channels, and multi-state itineraries.

Our team helps you:

• map your true nexus footprint across all 50 states

• identify where economic or physical presence has already been triggered

• structure bookings, pricing, and documentation so taxes are applied correctly

• automate sales tax and lodging tax through the right software stack

• reduce audit exposure with consistent, defensible evidence

• use voluntary disclosure programmes to limit back taxes and penalties

Whether you operate a single-state adventure business or a national experiential brand selling across multiple platforms, Antravia provides clear guidance, compliant structures, and ongoing support so you stay ahead of every state’s rules, before they become a problem. If you need help assessing your exposure or want a full sales tax review, Antravia can guide you through every step.

References

• Internal Revenue Service (IRS) – General Guidance on Sales and Use Tax, Nexus, and Excise Tax
  https://www.irs.gov

• IRS – Air Transportation Excise Tax (MSSP Guide)
  https://www.irs.gov/pub/irs-mssp/air_transportation.pdf

• Multistate Tax Commission (MTC) – Nexus & State Cooperation Resources
  https://www.mtc.gov/

• MTC Resources Archive
  http://www.mtc.gov/Resources.aspx?id=718

• Tour Operator Accounting: Deposits, Client Money, and Revenue Recognition
  https://antravia.com/tour-operator-accounting-deposits-client-money-and-revenue-recognition

• U.S. Sales Tax Rules for International Travel Agents
  https://antravia.com/us-sales-tax-travel-agents

• Taxes for Travel Agents: The Complete 2025 Guide
  https://antravia.com/taxes-for-travel-agents-the-complete-2025-guide

• How to File Taxes as a Travel Agent (2025 Step-by-Step Guide)
  https://antravia.com/how-to-file-taxes-as-a-travel-agent-or-2025-step-by-step-guide

Disclaimer:
Content published by Antravia is provided for informational purposes only and reflects research, industry analysis, and our professional perspective. It does not constitute legal, tax, or accounting advice. Regulations vary by jurisdiction, and individual circumstances differ. Readers should seek advice from a qualified professional before making decisions that could affect their business.
See also our Disclaimer page