When charging tax to a customer, do they pay taxes on a wedding photography service and the prints they order, or just taxes on the wedding services?

This question should really be discussed with a qualified tax accountant, rather than on this forum.

But, take this for what it is worth. You'll need to check with your state tax laws. Most state will--

1) collect tax for photographic service
2) collect tax for prints sold
3) not collect tax for prints shipped outside of your state

Unfortunately, each state will have it's own tax policies. Your state should have a web-site where you can apply for a tax ID number. It only takes a week or so to get. Plenty of PDF books available.

Also, be prepared. Many states are now collecting tax for purchases you make online. So, if you just purchased a 5DII from BH, you may need to file a "user tax" to collect the tax you thought you might be saving.

Best of luck. Get to an accountant.

>rw

My state, Arizona, does not charge tax on services . . . so I only charge sales tax on physical, tangible products delivered to my client. Digital downloads are not taxed, since it is not a tangible product, but a CD with images would be taxed.

I urge you to hire an accountant to help you with such important details.

Caveat: I am no expert, but watch out for state income tax nexus too. I am not sure if it applies in this situation but we are getting hit with this at states try to collect more revenue where I work (not photography related). If we work trade shows in a state for more than a certain number of days per year then we have to collect sales tax on orders shipped to that state. This may apply to some people shooting out of state weddings or even selling prints out of state. They are doing everything they can to find revenue right now.

Definitely check RE your state. TN considers any photographic services I provide to be part of a manufacturing process and not actually a service. Thus I charge sales tax (9.25%) for the full wedding package price, assuming delivery will be made in TN. The flip side is that I can apply for a manufacturer's number and be sales tax exempt on all camera and computer gear, as its considered industrial equipment.

-E

sboerup wrote:
My state, Arizona, does not charge tax on services . . . so I only charge sales tax on physical, tangible products delivered to my client. Digital downloads are not taxed, since it is not a tangible product, but a CD with images would be taxed.

I urge you to hire an accountant to help you with such important details.

My accountant says the same. If digital, in my agreements I 'loan the disc to the clients, so nothing physical is purchased, and they escape taxes.

In California, you are suppose to tax only tangible stuff not your labor. You will have to take care of income tax/SSI with your accountant.

I have seen many of these threads and I feel that when it comes to sale tax, no one wants to pay it, clients or photographers

Different states have different criteria but I think in the end, the state wants you to pay tax period!

While most states don't charge tax on services, services that result in reproduction uses such as prints, albums and other products are taxable (that means the entire amount) I.E. In California, a package of $2,500 for photography and a dvd of high resolution files for $500 will require you to charge sale tax on the entire amount of $3,000 not just $500! That is because the intent of service was to provide the client with the files on a tangible item (CD or DVD). The only way to get around not paying tax is to have your client download the files via internet (good luck with that!). I also read on this forum previously that someone came up with the idea of having the client bring a harddrive to transfer files (guess what? that harddrive is tangible!)

In the end, we all have to pay taxes Lets not get creative. Running a business, I rather charge sale tax on everything rather leaving it up to chances. If you read your state gov. pamphlet, everything will result in sale tax period You don't think they won't know that people will try to work around the system?

The economy is bad. The states (California in fact) are frantic. Don't try to get creative, they will get you! The way things are, I bet they are watching everyone even closer!

If you are in California, read this! www.boe.ca.gov/pdf/pub68.pdf

jeremy_clay wrote:
sboerup wrote:
My state, Arizona, does not charge tax on services . . . so I only charge sales tax on physical, tangible products delivered to my client. Digital downloads are not taxed, since it is not a tangible product, but a CD with images would be taxed.

I urge you to hire an accountant to help you with such important details.

My accountant says the same. If digital, in my agreements I 'loan the disc to the clients, so nothing physical is purchased, and they escape taxes.

Jeremy, does that really work? You should check and double check that. I think that is something the state can get you with if they really wanted to. You physically handing them a tangible product is taxable (loan or not). I can also loan prints, albums and etc...see what I am saying?

tuannie wrote:
jeremy_clay wrote:
sboerup wrote:
My state, Arizona, does not charge tax on services . . . so I only charge sales tax on physical, tangible products delivered to my client. Digital downloads are not taxed, since it is not a tangible product, but a CD with images would be taxed.

I urge you to hire an accountant to help you with such important details.

My accountant says the same. If digital, in my agreements I 'loan the disc to the clients, so nothing physical is purchased, and they escape taxes.

Jeremy, does that really work? You should check and double check that. I think that is something the state can get you with if they really wanted to. You physically handing them a tangible product is taxable (loan or not). I can also loan prints, albums and etc...see what I am saying?

You could loan the client a DVD full of files, they take it home, copy the files onto their comp, and return the DVD to you. You can't do that with a print or album.

LERtastic wrote:
tuannie wrote:
jeremy_clay wrote:
sboerup wrote:
My state, Arizona, does not charge tax on services . . . so I only charge sales tax on physical, tangible products delivered to my client. Digital downloads are not taxed, since it is not a tangible product, but a CD with images would be taxed.

I urge you to hire an accountant to help you with such important details.

My accountant says the same. If digital, in my agreements I 'loan the disc to the clients, so nothing physical is purchased, and they escape taxes.

Jeremy, does that really work? You should check and double check that. I think that is something the state can get you with if they really wanted to. You physically handing them a tangible product is taxable (loan or not). I can also loan prints, albums and etc...see what I am saying?

You could loan the client a DVD full of files, they take it home, copy the files onto their comp, and return the DVD to you. You can't do that with a print or album.

I will let them return the album, prints and whatever else 40-50 years from now!

I think it's call fabricated labor. He burned the dvd, package it (may or may not) and loaned them for reproduction purposes and that falls under taxable sales. Not to mention they have to physically pick up the dvd and physically return the dvd (I mean on paper that is). If they transfer all the files via internet, it is a different story. also, once they download the images, they reproduce it into prints, albums and other products as result. That also falls under taxable sales. At least in California, all of what I've said applied.

All photographers that know, including well-known photographers, tax the entire package. The state board of equalization told me personally that there is no way around it when it comes to wedding photography. I gave them all the scenarios. They expect to see the whole thing taxed. No one is going to believe that you shoot a wedding for $x,xxx so that your clients can look at it on their computers (no prints or anything else will result from that).

I am just trying to help and simply question if that is something he wants to look into. If you really believe it works and legal, hey no harm to me. But I like I said, it will not be fun to audited and they put you on the black list. I am not being righteous here...I just feel maybe we all need to be a little careful.

I do know that when I was a full-time graphic designer, I ( as well as clients) never had to pay sale tax. Everything was electronic.

jeremy_clay wrote:
sboerup wrote:
My state, Arizona, does not charge tax on services . . . so I only charge sales tax on physical, tangible products delivered to my client. Digital downloads are not taxed, since it is not a tangible product, but a CD with images would be taxed.

I urge you to hire an accountant to help you with such important details.

My accountant says the same. If digital, in my agreements I 'loan the disc to the clients, so nothing physical is purchased, and they escape taxes.

I do it a different way. I charge $485 for the licensing fee, and $15 for the delivery of the CD. They are in reality licensing the images to use however they wish, but they only are taxed on the $15 CD which is the tangible product.

tuannie wrote:
I will let them return the album, prints and whatever else 40-50 years from now!

I think it's call fabricated labor. He burned the dvd, package it (may or may not) and loaned them for reproduction purposes and that falls under taxable sales. Not to mention they have to physically pick up the dvd and physically return the dvd (I mean on paper that is). If they transfer all the files via internet, it is a different story. also, once they download the images, they reproduce it into prints, albums and other products as result. That also falls under taxable sales. At least in California, all of what I've said applied.

All photographers that know, including well-known photographers, tax the entire package. The state board of equalization told me personally that there is no way around it when it comes to wedding photography. I gave them all the scenarios. They expect to see the whole thing taxed. No one is going to believe that you shoot a wedding for $x,xxx so that your clients can look at it on their computers (no prints or anything else will result from that).

I am just trying to help and simply question if that is something he wants to look into. If you really believe it works and legal, hey no harm to me. But I like I said, it will not be fun to audited and they put you on the black list. I am not being righteous here...I just feel maybe we all need to be a little careful.

I do know that when I was a full-time graphic designer, I ( as well as clients) never had to pay sale tax. Everything was electronic.

I think it may be important to note that Jeremy (as well as myself) are from Canada. I'm sure there are probably a few ways our laws differ greatly from yours. For example, I do not have to pay taxes until I make more than 30k a year, and from what I understand, in the US any income is taxable, no matter how much you make. I'd be curious to see the Canadian laws that apply to wedding photography taxes.

The only thing we pay tax on here in Kentucky is the products purchased.

Services are tax-free.

If I deliver anything, CD, prints, email images then tax is due. If I charge a fee to photograph but deliver nothing then I do not have to tax the service. Different states have different tax laws. Call the comptroller or look up on line and they have everything listed.

Loan the disc.....they tax auto leases that are the same concept since ownership does not change hands. Someone is going to have a lot of past due taxes. If you allow the use of the image or pretend to allow it by giving a
CD then you better pay the tax or be ready for audit time.Sure they had that one figured out and addressed years ago when CD were first burned.