To Tax or Not to Tax

[AndrewSA]

Just wanted to make sure I've been doing this right. Just got back from the Tax man...ouch.

Anyhoo, I pretty much do all commercial / service based photography, so there is no selling prints, etc. It's just my time really. So is there anything that's taxable? If I invoice a client $1500 for the total of time worked, it's not taxable right?

[PeteQ]

Check with a CPA, when I was in Texas some of my commercial work was subject to tax. Depends on your client and the usage....

[Shane]

I would say that it is taxable according to the Texas Tax Code since "service" is taxable:

"The Texas Sales Tax Code does not define ‘in business”, however, each sale of a taxable item or service in Texas is subject to tax. Therefore, for sales tax purposes, you are considered to be “in business” when you begin to offer for sale taxable items or services."

[AndrewSA]

Thanks Shane.

What does everyone else do? Even if you are a portrait photographer, do you apply a sales tax on the sitting fee and shooting time? Or just print sales?

Originally Posted by Shane

I would say that it is taxable according to the Texas Tax Code since "service" is taxable:

"The Texas Sales Tax Code does not define ‘in business”, however, each sale of a taxable item or service in Texas is subject to tax. Therefore, for sales tax purposes, you are considered to be “in business” when you begin to offer for sale taxable items or services."

[brad]

Shane: Not all services are subject to state sales tax....

From my understanding, only the deliverable product is taxable... but there has been some debate in the sales tax office about what deliverables are taxable. I think the most current interpretation says that even if you never actually deliver physical product (prints, cds of images) and only deliver your images to them electronically.. that is still "physical enough" to count it as taxable.

As for session vs. prints.. technically, only the prints are taxable, the session is not... BUT if you include ANY prints or images (electronically or otherwise) with the session, then the whole session is taxable.

But IANAL, IANACPA, and YMMV

[HotHolly]

Ditto to that. Call the tax office and ask them. They are always happy to tell you what they want money for. And you do not want to be audited and find out you were supposed to be charging tax and have them come after you for it. That would suck.

[CobyPhoto]

Think of it like this, if you process the images, it IS taxable. Period. The only way it would be a Non-taxable transaction, is if you took the photos and did NOTHING to them and the client never received even a proof, then you would not have to collect sales tax.

Another example would be if a client paid you a retainer, and then the job never actually happened. That Retainer is NOT taxable either. You are receiving ALL labor and no product.

The reason that the session fee is taxable, is that you cannot do prints (portraits) without the session therefore the session is a taxable service.

CJ

[toverman]

Side subject but still taxing ... there's always income tax!!!

[AndrewSA]

So I pretty much process all my images ( I would think all photographers do this now), so I suppose everything I shoot for clients is taxable. I better call the tax office though.

Originally Posted by CobyPhoto

Think of it like this, if you process the images, it IS taxable. Period. The only way it would be a Non-taxable transaction, is if you took the photos and did NOTHING to them and the client never received even a proof, then you would not have to collect sales tax.

Another example would be if a client paid you a retainer, and then the job never actually happened. That Retainer is NOT taxable either. You are receiving ALL labor and no product.

The reason that the session fee is taxable, is that you cannot do prints (portraits) without the session therefore the session is a taxable service.

CJ

[CobyPhoto]

Originally Posted by swinglight

So I pretty much process all my images ( I would think all photographers do this now), so I suppose everything I shoot for clients is taxable. I better call the tax office though.

Andrew,

This is pretty much the case for all photographers. I have only had one or two times that I ended up with a retainer that wasn't utilized and therefore not taxable.

As they say, everything in photography is taxable.

CJ

[René]

This link may help you out a little http://www.window.state.tx.us/taxinf...2_06.html#art3
I would like to ad for anyone accepting money for any service, do yourself a favor and get a CPA. We have two businesses besides my husband’s day job so we were afraid of mixing money, not collecting enough sales tax and not paying enough income tax. And, we knew we were missing out on deductions that could save us money. It’s well worth the cost of a CPA to us. My Dad has been in trouble with the IRS before and it isn’t pleasant to say the least. I understand being in trouble with the Texas Comptroller over not paying your sales tax can get pretty ugly too. Very scary to me!!

[mkweaver]

What good is the photography service if the client gets nothing but service? Don't you give them at least a digital file. Digital is taxable!
Again, call the state taxing entity; they are very good at showing you page and verse as to whether a particular thing is taxable.
I had to do just that when photographing the implosion of a building for a blasting company. I didn't give them any "pictures" just files; but it was definitely taxable!

[CobyPhoto]

Originally Posted by mkweaver

What good is the photography service if the client gets nothing but service? Don't you give them at least a digital file. Digital is taxable!
Again, call the state taxing entity; they are very good at showing you page and verse as to whether a particular thing is taxable.
I had to do just that when photographing the implosion of a building for a blasting company. I didn't give them any "pictures" just files; but it was definitely taxable!

Everyone has made it clear that if you give a client ANYTHING, prints, electronic images, CD-ROM, etc. that the service is taxable.

There are VERY few exceptions to this. But they do exist. In the years since they changed the laws dealing with labor and tax I have only had two times I didn't have to tax my service.

CJ

[bondarnes]

Unless they have a resale certificate or a non profit exemtion, We ALWAYS charge sales tax. It is a pass thru anyway so to be safe we charge it and pay it to the state.

[adirty1]

your labor as a photographer is taxable. you have to charge sales tax on it. a few years 10-12 or so it was non taxable. there are very few services that are non taxable. I remember the conversation with the sales tax guy when I stated doing freelance work again which was 6 years ago.