I think that for "everything" we would use "tutto", not "tutti", in Italian. But I'd like to hear a more expert opinion too. :)
Your suggestion has a mismatch in the verbal mood: - "Tutti sono" is describing (verbal indicative mood) that "they are". - In English: "be there" is giving an order (verbal imperative mood) to "everybody".
How can sono here be accepted as "is", but not in other exercises where the context warrants it? I'm finding DL's inconsistency frustrating