Since we started in business 9 years ago, we have been instructed by two accountants that our service of taking photographs was not taxable. As such we have only ever collected tax on tangible products (prints, albums...etc).
We recently had a discussion with our local tax officer who believes "in his interpretation" that photographers are indeed taxable under PA code 32.37 which states:
"The photographer or photofinisher shall collect and remit tax upon the total purchase price charged for the photographs or services."
They are slowly working through a list of most requested states, and lucky for you, they've already done PA.
69$!!!!
what kind of robbery is that?
To the OP... Sales tax is one of the dumbest things pertaining to a photography business. You can talk to 3 different accountants in your state and get 3 different interpretations.
Then you can call the Sales Tax division in your state and they will give you another answer.
Dumb
As I understand it, in Colorado if we sell a tangible product it gets taxed.
If we include tangible products in the photography package their is no tax collected UNLESS the tangibles cost more than the services provided (so the total package price is 5000$....2000$ shooting cost, 3000$ in albums)...then you tax the whole thing.
It also depends how you write your contracts out and if you are collecting money for one big package or smaller packages with things split up.
Funny story....last time we submitted our sales tax return (we do it quarterly) we overpaid by accident. The overpay was because we submitted before the deadline and therefore earned a 3% discount. We did not know about the discount. The Colorado Sales Tax people then wrote us a nasty letter telling us that if we overpaid again they would fine us.
Who in the F*&^ dumb is that? I send in to much money so they are going to fine me.
whatever.
PA has a 6% sales tax on the photography and products that you sell. For Philadelphia we have to pay 8%. That is sales tax on the entire price of the package. A $5000 wedding package has a $300 sales tax. Every photographer and accountant I know has said that photography is taxable, even if it's just shooting and posting images online.
I collect sales tax on the entire package. My accountant has told me that's what I'm supposed to do, so that's what I do. No need to over complicate sales tax. Just have the clients pay it, then submit it quarterly. Simple.
Thanks. It's just frustrating when two CPAs (who are admittedly very old-school) have told us that there is no need to collect the tax on our service. I mean... who else can I trust?
Pulling up the actual PA tax code seems to pretty clearly state that we need to collect it on everything but only because the code is incredible antiquated and assumes that photographers are defined as "Someone in the business of capturing, processing, and delivering photographic prints".
Of course, the current PA code does say that my "processing chemicals" can be purchased tax-free.... lol.
minnigphoto wrote:
Thanks. It's just frustrating when two CPAs (who are admittedly very old-school) have told us that there is no need to collect the tax on our service. I mean... who else can I trust?
Pulling up the actual PA tax code seems to pretty clearly state that we need to collect it on everything but only because the code is incredible antiquated and assumes that photographers are defined as "Someone in the business of capturing, processing, and delivering photographic prints".
Of course, the current PA code does say that my "processing chemicals" can be purchased tax-free.... lol.
You're going to want to talk to a new CPA... The unfortunate thing is (and I learned this the hard way many years ago) that you may have to back pay previous years and may face a payment penalty on top of that.
If you need a good CPA that works with a some photographers in PA, let me know. I have a good referral that I've sent a bunch of people to.
