Should I charge sales tax on my photography?
Photographers are in a unique position. The photos they take are provided as a service. However, the photos they deliver to the customer are considered products in some situations. Making things even more complicated, laws can vary from one state to the next when it comes to charging sales tax.
Photographers have to check local laws on each service they provide to make sure they’re legally charging and paying sales tax. Here are a few things every photographer should know before scheduling a shoot.
Photography as a service
At one time there was a disconnect between the process of taking a photo and processing that photo. In that scenario, photographers could easily say the sitting fees and other charges were completely separate from the end product. For sales tax purposes, the process of developing the photo was known as "fabrication services."
Digital photography has blurred the lines, especially now that the end product is often delivered electronically. Since taking the picture is an integral part of delivering that product to the customer, many states see the money photographers earn from photography shoots as fabrication services and require they be taxed.
Photographs as products
Since photographers often no longer deliver their end products as physical prints, it’s important that they study local laws relating to their particular delivery type. If they deliver prints by a CD or flash drive, those are tangible goods that most states will see as taxable. However, now that so many photographers offer Web-based access to allow customers to download their own images, the price customers pay for their photos may be taxable.
The number of states that tax digital images is growing, with Alabama, Texas, Utah, and several others now requiring taxes on purchases. In those states, a photographer may find it necessary to charge sales tax on every customer’s entire bill, since most photographers only charge for the shoot and the end product. It’s important that photographers in states without digital image tax carefully monitor changes to the law.
Calculating local rates
If things weren’t complicated enough for photographers, sales tax also can vary from one city to the next. For those whose shoots are limited to their own town, that might not be an issue. However, many photographers must travel across a wide regional area to meet their customers’ needs. Some photographers even cross state lines to shoot destination weddings and other events.
It’s important to check the local sales tax rate for the area where services were performed. If a photographer travels out of state, that photographer may have to register, collect, and remit sales tax on any services or products sold there.
Photography can be a lucrative, rewarding career for those who have the talent. By ensuring they’re compliant with all local sales tax laws, photographers can earn money without worrying about an audit. In some states, everything from the shoot to the end product is taxable, so it’s important to closely check the laws before sending an invoice.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
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