MyFitnessPal provides powerful tools that make it easier for everyone to live a healthier life by tracking meals and physical activity.
MyFitnessPal is one of the best health and wellness apps, helping nearly 1 million users reach their nutrition and fitness goals every year. Members use it to log food, hydration, weight, and exercise so they can better understand their habits and reach their goals, and take advantage of the app’s food database, that contains over 18 million foods.
MyFitnessPal is a finalist for Mogul’s Top 100 Workplaces With The Best D&I Initiatives in 2021 and included in Mogul’s Top 100 Workplaces For Diverse Representation in 2022.
Developing a Well-Rounded Accounting and Tax Team with “Quiet Confidence”
Confident. Quiet. Trustworthy.
This is how Mike Williams, Controller, describes his accounting department at MyFitnessPal™, the #1 global food tracking and nutrition app. Mike’s team, by his own account, includes Kelsey Althoff, Senior Manager, and the entire State and Local Tax (SALT) team at Clearview Group.
So, how did Clearview Group become an extension of MyFitnessPal’s accounting team?
Several years ago, Mike was part of a 160+ person accounting department for a large company Clearview Group helped with a Nexus Study and subsequent Voluntary Disclosure Agreements.
“I was working with some of the smartest tax people I’ve ever met,” Mike recalls.
When this company sold MyFitnessPal in 2020, Mike was the accounting lead for the divestiture and became Controller of the now private-equity-backed MyFitnessPal.
“My entire world flipped upside down,” Mike recalls.
He went from working with a 160+ person accounting team with a dedicated in-house tax department to leading a team of three.
“When I realized I had no in-house tax expert, Kelsey and the team at Clearview were the first people I thought of,” says Mike.
The Unseen Challenges of Indirect Taxes
While adjusting to his new role, Mike worked with Kelsey Althoff, Sales and Use Tax expert, and her team at Clearview to tackle the new potential indirect tax challenges the software company was facing.
Challenge 1: Sales Tax on Intangibles – SaaS
Kelsey and the team got straight to work, identifying the areas where MyFitnessPal could have indirect tax liabilities.
“Many companies don’t consider tax when they think about intangibles like software,” explains Kelsey.
Since not all states charge sales tax on SaaS (software-as-a-service), Clearview worked with MyFitnessPal to ensure they were covered in all the areas related to sales taxes.
Challenge 2: Third-Party Delivery Channels
As with most apps, many of MyFitnessPal’s sales are through third-party app stores like Apple iTunes and Google Play. This adds another layer of complexity to sales tax liability.
“We had to determine how these intermediaries would affect the sale,” states Mike.
Companies like Apple sometimes charge and remit sales tax on a mobile app’s behalf, but every carrier is different.
“It’s a mixed bag,” Kelsey explains. “When dealing with some of the smaller marketplaces or with direct sales, MyFitnessPal is responsible for having processes in place to ensure the company stays compliant.”
The team put proper protocols and procedures in place for each carrier, and they are now running “like a well-oiled machine,” says Kelsey.
Challenge 3: New Remote Work Policy – Impacts on Nexus
Up to that point, MyFitnessPal had sales across the U.S., but only had employee presence in a few states, including California and Texas.
After the transition of ownership in 2020, MyFitnessPal moved to a “remote is equal” employment policy, which Mike knew would impact their tax liability.
“I thought to myself, ‘I better call Kelsey,’” he explains.
Clearview helped Mike’s team make strategic decisions about how to open up the company to remote workers across the nation, including in view of the Wayfair Case of 2018.
What is Wayfair?
South Dakota v. Wayfair, Inc., 585 U.S. (2018), was a United States Supreme Court case that held by a
5–4 majority that states can compel out-of-state sellers (remote sellers) to collect sales tax even
if they do not have a physical presence in the taxing state.
“This was a great decision as it allowed us time to figure out how hires in these states will impact us on the back-end,” Mike explains. “Today, we are happy to be able to hire in almost any state.”
“I cannot possibly keep up with all 50 states’ sales and indirect taxes criteria,” Mike says. “That’s why we keep Clearview by our side.”
Challenge 4: New Remote Work Policy – Use Tax Self-Assessment
Once MyFitnessPal expanded its presence to having employees based in more than 30 states, it was time to adjust the company’s use tax reporting process.
The company changed its self-assessment process.
As a result, certain items that were previously taxable before the company was fully-remote, were no longer subject to use tax when allocated to certain other states where remote employees worked.
Mike was pleased, “This actually saved us money.”
Maintaining a Quiet and Trustworthy Accounting Department
Mike likes to keep his accounting department quiet, dependable, and trustworthy.
“Our CEO doesn’t want to think about accounting and taxes, and she doesn’t have to because it’s taken care of,” he explains.
Without anyone in-house with a tax background, Mike considers Clearview Group a crucial part of keeping his accounting department reliable. He knows the strong accounting professionals at Clearview take a confident “we will figure this out” approach to every issue. And just like an internal team member, there’s no rigidity to the relationship; Mike can reach out whenever something comes up. He explains that all SALT issues are tracked in a shared spreadsheet, and at this point, that spreadsheet is pretty dry, to the delight of both Mike and Kelsey.
“We’re on the straight and narrow,” Mike states proudly.
But the main impact to the company outside the accounting department, is comfort.
“Our execs don’t want to spend a lot of time thinking about our tax landscape – it just needs to happen and happen quietly so they can focus on the product and the market.”
And that’s how MyFitnessPal and Clearview Group get it done … confidently and quietly.
