Click! What Washington Photographers Need to Know About Sales Tax
- Sales Tax News
- Aug 15, 2014 | Gail Cole
The first thing that comes to mind when you hear the word “photography” is probably not “sales tax.” Yet professional photographers need to consider sales tax as much as lighting and framing a shot. To help photographers get Washington sales tax right, the Washington State Department of Revenue has published a Photography Tax Guide.
Portrait photography, event photography, photography for hire… specific sales tax rules apply to each situation. Unless specific exemptions apply, photographers generally charge their customers retail sales tax on all charges. But there are, of course, exceptions to that rule. Sales tax is never simple, which is why the Photography Tax Guide spans more than twelve pages.
Sales of photographs are sourced to the location where the buyer receives the photo, be it in tangible or electronic format. For example, if a photographer doing business in Anacortes takes photographs on Orcas Island and delivers them to a customer in Seattle, the sale is sourced to Seattle (where the photos exchanged hands) and subject to the Seattle rate of sales tax.
However, in this digital age, sellers don’t always know exactly where a buyer will receive (download) a product; the Seattle buyer described above could download the photos onto a tablet, mobile phone or laptop while traveling to Walla Walla, or Beijing for that matter. In such situations, the DOR recommends the seller “use an alternative sourcing method as provided by RCW 82.32.730:”
“When the actual place of receipt is not known, then an address available from the seller’s business records is sufficient for sourcing the sale. If that information is not available, then the customer’s billing address may be used.”
It should be noted that Washington sales tax should not be collected when the buyer is not a resident of Washington, even if the photographs were taken in Washington. It is the responsibility of the seller to determine whether or not sales tax must be remitted to another state.
Like their tangible counterparts, sales of digital photographs are subject to tax in Washington. When digital photographs are transferred electronically they are considered to be “digital goods” and are subject to retail sales tax and Retailing B&O tax.
The Photography Tax Guide makes a distinction between digital goods and digital photographs transferred electronically:
“’Electronically transferred’ or ‘transferred electronically’ means obtained by the purchaser by means other than tangible storage media… Therefore photo files delivered on CDs, USB drives or other tangible media are not digital goods.”
Nonetheless, photographs transferred electronically are still subject to sales tax.
There is, however, a sales tax exemption for “digital goods used solely for business purposes,” provided the buyer provides the seller with a properly completed Digital Products and Remote Access Software Exemption Certificate. In order for the exemption to be valid, all the following conditions must be met:
- The customer is a business
- The customer will use the photo solely for business purposes
- The photo is delivered electronically
Photographers sometimes charge their customers separate sitting fees (sometimes called shooting fees or session fees). The taxability of such fees depends on the ultimate use / ownership of the photographs.
Separately stated sitting fees are generally subject to sales tax. However, when photographers sell the right to further exhibit their photographs, they do not need to collect sales tax on sitting fees and royalties. The Photography Tax Guide provides a number of examples to illustrate the taxability of sitting fees.
Photographer as consumer
You can’t take a photograph—even a bad photograph—without some sort of camera. Photographers use a variety of equipment and supplies (including cameras, lenses, computers, and office supplies) in the course of business. Sales tax is due at the time of purchase of such items, and use tax is due if for some reason tax was not paid at the time of sale.
Certain services are also subject to Washington sales and use tax when purchased by a photographer. These include:
- Remote access software (RAS)
- Digital automated services (DAS)
Anyone in the photography business in Washington should take the time to read the Photography Tax Guide. Then consider how automated sales tax software would allow you to spend more time and energy on your photographs.