Alabama Clarifies Sales Tax for Photographers
- Jan 5, 2016 | Gail Cole
Just as a photographer might seek to create a crisp final product, the Alabama Department of Revenue seeks clarity in its sales tax rules. To that end, it has recently amended Rule 810-6-1-.119 to clarify how Alabama sales tax applies to retail sales of blueprints, photographs and similar products delivered in print or digital form (the form of the final product does not impact taxability). The amended rule is effective January 4, 2016.
Not subject to sales and use tax
- Separately stated charges to develop negatives belonging to the customer
- Separately stated charges to charter an airplane for the making of aerial photographs
- Separately stated charges for tinting or coloring photographs delivered to photographers
- Any “reasonable and customary retainer fee separately stated on the photographer’s contract that is both nonrefundable and may not be credited toward any purchase of photographs”
Subject to sales and use tax
- Fees for consultation, sitting, or “any other activity that is done in preparation of the final product, even when separately stated,” when they are “part of the labor or service cost and cannot be deducted from the gross proceeds accruing from retail sales.”
It seems straightforward enough, but the devil is in the details, for details can alter taxability. For example:
A photographer charges a client $3,000 for consulting, sitting and other fees, $250 for a disc of images, and a $250 print credit. After the session, the client instructs the photographer to mail the disc of images to a location outside of Alabama and the prints to an in-state location. In this situation, sales tax applies to the $3,000 in fees and the $250 for the prints mailed to an Alabama location. However, sales tax does not apply to the disc sent out-of-state so long as the charges are separately stated and the invoice includes proof of the interstate commerce.
The amended rule also clarifies the following: “Photographic prints, blueprints, or other images sold to an advertising agency for use in the performance of a contract are purchased at retail by the advertising agency and are subject to the sales or use tax, whichever may apply at the time of such purchase.”
See Amended Rule 810-6-1.119 for additional examples.
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