sales tax question

[akimartymar]

I read the sticky about sales tax but didn't see this question answered. If I charge $1000 do work a wedding, do I have to pay sales tax on that amount or just the photos sold. It seems like paying on the whole amount would be more like income tax than sales tax.

[CobyPhoto]

Yes, you have to pay sales tax on the entire amount. It used to be that you didn't have to pay sales tax on services. However, we are a service based economy anymore so the State is going to get their cut.

If the service results in any tangible product...CD, proof, prints etc. then you must collect sales tax on the entire amount, service included.

If you don't have a tax number yet, get it. If you don't pay it and they do audit you, you will never NOT collect sales tax again. They are ruthless in an audit.

If you have any further questions, just ask. I have a pretty strong background in this area both photography business and other.

CJ

[*Mike*]

You have tax due on the entire amount - as far as I know, only California distinguishes between the product and the time, allowing tax to be collected only on the prints, a byproduct of the entertainment lobby.

Think of it this way... a plumber charges you $500, you're paying tax on the entire amount - not just on the $10.00 part. This isn't an income tax since you are expected to be charging the client the tax - it doesn't come out of your pocket, you're just the middle man passing it on to the state.

[texaswolflady]

When in doubt, it's best to contact the State Comptroller and most cities have a local office that you can call. Or check out their website and see what they have to say about sales tax....That way you know how much to charge for the area you are dealing with and if I remember correctly, there are different amounts based on the location....

[brad]

Originally Posted by CobyPhoto

If the service results in any tangible product...CD, proof, prints etc. then you must collect sales tax on the entire amount, service included.

Probably doesn't apply to wedding... but there is also a debate going on whether the tax is still collected if the photos (or other sales item) is delivered electronically. In other words, you shoot photos and deliver them on the Internet.. you don't print them, you don't deliver them on CD.. only electronically. Current opinion on this is that you DO need to collect sales tax on this, just like a software developer (which I also do) must collect tax on software sold and delivered solely online if sold to an in-state resident.

[CobyPhoto]

Probably doesn't apply to wedding...

Unfortunately it does...straight from the State Comptroller's website concerning what is and is not taxable. There are very few NON-TAXABLE services out there now and photography is NOT one of them.

"Taxable labor
Services employed in manufacturing, assembling, fabricating, or processing products, even when the customer provides the raw materials, tools, or equipment. Examples of taxable labor include developing photographs, producing artwork, printing, calligraphy, custom sewing or tailoring, catering, and assembling products such as toys, furniture, or equipment."

If you have any further doubt, please do call the State Comptroller's office and they will explain that all services a photographer provides, if a product is delivered or not, (cause you work on the proofs, etc. (i.e. develop them) once photo/images are taken results in a taxable service; even if delivered via the web. It is the act of editing, post-processing them that makes them into a product and therefore makes them taxable.

It did not used to be like this. Only the raw materials used to be taxable, not the labor. That has long since changed. Tax laws have changed repeatedly to deal with the new "service" based society we live in. So many things are outsourced and don't have any "raw materials" involved, but there is still sales tax that has to be collected on those services.

CJ

[brad]

What I meant by "probably doesn't apply to wedding" was that weddings aren't typically delivered by Internet only... that's all.

The debate has been over whether photography services that don't produce anything physical (developing photographs and printing produce something physical.. even burning a cd produces something physical..), just electronic bits... if that is taxable. I don't know what the current status is, but a year or so ago, the State seemed to not have made a decision on that. This may have changed by now, obviously... me, I make sure to deliver something physical every time.. that way I *know* its taxable, collect the tax.. and no arguments from either client or State.

[CobyPhoto]

Brad,

I get what you are trying to say. The things is, regardless of delivery method, electronic or physical, you preform a taxable service by editing, post-processing and proofing files. Editing, color correcting etc. is the same thing (only digital) as developing film.

It wouldn't matter if you shoot a wedding, studio portraits, etc.; if you post and proof, you must collect sales tax.

CJ