Tax Question

[Mandy]

Here's the scenerio. I shot a session for a client at his MIL's house in Rockwall. I processed the images, received payment(via mail), placed and packaged the order at home here in McKinney, and then I delivered the prints to a random parking lot in Mesquite near the clients work. The session fee was on 2005 taxes and I charged it for Rockwall where the session and payment took place, but now I'm dealing with this for 2006 taxes. Does anyone know who gets the city/county tax in this situation?

[LoungeLizard]

I believe it is based on the location of the business - in which case it would be your home. Of course, I could be wrong about that.

[Stephen H]

http://www.window.state.tx.us/taxinf.../tx94_105.html

"With the exception of transit authority sales and use tax and the exceptions listed later in this document, local sales taxes are collected based on the location of your place of business. A place of business is a store, office, or other location operated for the purpose of receiving orders for taxable goods or services."

[hhscr]

You had better call the State Tax office for directions. I have a service business that requires me to go to customers homes and work. The invoice is created at the time the job is finished and billed at the customers homes. In this situation I was told that I had to collect the taxes for each city or MTA that I do business in and pay them accordingly.

What may be in your case is that all your invoices will be coming from your home. If this is the case it will make all your tax payments and collections easier.

Good Luck

[Wendyp]

When I applied for my permit, I was told by the agent that I must charge the amount based on the place where the customer takes delivery. It's terribly confusing because here in the metroplex, there are several different tax rates. The agent gave me a thick book of tax rates, but not really any directions for what to do. Somehow I have managed to deliver photos to people in Fort Worth only, which is where I live, or they have picked them up from me. I also use Exposure Manager partially so I won't have to worry about collecting the tax.

[hhscr]

The keeping up with the various taxing cities and rates was a pain at first, but I got a decent accounting package and it allows me to give each invoice a diffrent tax code so the final report can be generated to give the tax totals for each city.

I did not have a choice in the matter, but if I did I would want all my pickups at my home office just to prevent this. I have been using exposure manager also for photos so this is not something I have to worry about.

[bondarnes]

Originally Posted by Wendyp

When I applied for my permit, I was told by the agent that I must charge the amount based on the place where the customer takes delivery. It's terribly confusing because here in the metroplex, there are several different tax rates. The agent gave me a thick book of tax rates, but not really any directions for what to do. Somehow I have managed to deliver photos to people in Fort Worth only, which is where I live, or they have picked them up from me. I also use Exposure Manager partially so I won't have to worry about collecting the tax.

If you look at the address on your sales and use tax permit and use that address for all sales taxes you will have no problem. The comptroller is not going to follow you around to find every order delivered in another taxing entity. It is just too much paperwork for you and for them for the few dollars a year difference. The tax difference between 7.75% and 8.25% on $1000. is only $5. Not worth the effort. Now when I had two studios that were each grossing over $100K per year then yes that is a big difference. But in that instance each location had its own permit and all sales were recorded separately.

[Mandy]

Thank you for all your input. I will be calling the tax office early next week to clarify and I will post what I find out. I know I was told by the lady at the tax office when I got my permit that b/c I do on location shoots I have to keep track of multiple taxing entities and fill out the long form so I don't think I can just use my home address.

Wendy, what is Exposure Manager and how does it make it so you don't have to worry about sales tax?

[Wendyp]

Originally Posted by Mandy

Wendy, what is Exposure Manager and how does it make it so you don't have to worry about sales tax?

www.exposuremanager.com

It's a photo hosting service like Smug Mug etc. Since they are physically in California, when a client places their photo order on your exposuremanager website, and you allow Exposure Manager to fill the order for you, it is considered an out of state purchase for your client and is not subject to sales tax.

[texaswolflady]

When in doubt, I would suggest calling the State Comptroller's office for tax questions and there should be a local office in your area....Be sure to keep notes on who you talk to just in case...

[bondarnes]

Originally Posted by texaswolflady

When in doubt, I would suggest calling the State Comptroller's office for tax questions and there should be a local office in your area....Be sure to keep notes on who you talk to just in case...

The only problem I can see with that is that they also keep records of who called and what the questions were. I don't have personal knowledge, but have been told that they sometimes drop in for an audit after certain questions are asked.

[DeLeon]

Originally Posted by Wendyp

www.exposuremanager.com

It's a photo hosting service like Smug Mug etc. Since they are physically in California, when a client places their photo order on your exposuremanager website, and you allow Exposure Manager to fill the order for you, it is considered an out of state purchase for your client and is not subject to sales tax.

I would be careful there. Here is what the comptrollers web site says

http://www.window.state.tx.us/taxinf...2_06.html#art3

[CobyPhoto]

Originally Posted by bondarnes

If you look at the address on your sales and use tax permit and use that address for all sales taxes you will have no problem.

You got it Don! As long as your calculation are correct based on that tax percentage, they will not even think twice about it.

I have never heard of them dropping in for an audit after asking questions...woudln't surprise me, thou. I HAVE been through 2 State Sales Tax Audits in the past, (in a CPA capacity) and I will say this...you DON'T want to do it. It ain't fun.

CJ