Luckily, services are not taxed in AZ. Only tangible products. To divert the whole taxing on a $1000 CD, you can charge $1000 for the CD as a "Licensing Fee" which it should be charged like that, they are licensing your work. Then charge a delivery fee of $15 for the CD.
I don't charge taxes on the packages... I upload everything to smugmug. When people log in to smugmug and order prints, they are taxed by smugmug accordingly. If, and only if, the client wants an album, I charge sales tax on the album and invoice it separately since it's not a part of the wedding package?
It's almost doesn't make sense to clients that they have to pay extra for us (as photographers) to make sure that they buy prints from us.
I don't charge taxes on the packages... I upload everything to smugmug. When people log in to smugmug and order prints, they are taxed by smugmug accordingly. If, and only if, the client wants an album, I charge sales tax on the album and invoice it separately since it's not a part of the wedding package?
It's almost doesn't make sense to clients that they have to pay extra for us (as photographers) to make sure that they buy prints from us.
You should call the state board of equalization and let us know. I bet they'll say it all has to be taxed though.
As someone else said, call the tax board and ask them, tell them to send the answer in written form as well. The laws are subject to interpretation and one tax board worker may have a different interpretation than another (we have experienced this before). If you get an answer, follow that then get nailed for it you want to have a written statement from them to show why you are doing what you are doing.
If you don't charge the right taxes they will just force you to pay the difference yourself, so make sure you collect it from your clients correctly.
A lot depends on when and if you report the tax as income. Paper and supplies are of course taxable, as long as you bought them with a resale lic. If you bought them over the counter, then up the price, the customer still pays the taxs on the "up" price, still you must report all the tax. Making a whole package price and state includes taxes, then you may have it covered, but you still have to report those taxes based on your figures. School pictures for kids, always include taxes, as does hotdogs at sporting events in some places. If you rented cameras or equipment, in Ca. that is not taxable, so you could not add sales tax from the rental costs to these items.
I have a PDF of a flow chart from the APA regarding sales tax in the state of CA. I don't have a good way to post it though. I could email it to someone if they wanted to post it.
