sales taxes 1
March 9, 2008 – 5:00 amSales taxes for photographers
Photographers find sales taxes particularly perplexing (and that’s understandable). I can only hope to give an overview, please speak to a professional advisor or accountant to get specific answers for your state or locale because things are always changing. The short story is this: if you are going to sell photographs or photographic services to consumers then, with rare exceptions, you’ll be charging and collecting sales taxes.
Last year I spent an hour on the phone with the Ohio State Department of Taxation to get clarification on when and how sales taxes should be collected and paid by photographers (there have been changes in recent years). I’d like to break this down into two parts: what is taxable and who pays the tax.
What is taxable?
All goods and services that contribute to the creation of a new, tangible product are taxable in Ohio. Photographs, no matter what form (print or digital) are considered new, tangible products. That means that if we create images that didn’t exist before, then sales taxes need to be collected and paid on both our goods and services.
At one time only goods (and not services) were taxable. That was quite a few years ago but some photographers want to cling to that idea. It’s simply not true (in Ohio) any more.
Using this old example, a portrait photographer would not charge sales taxes on their sitting fee or portrait session because it was a service. Sales taxes would be charged, though, on the sale of prints because they were tangible goods. With the present tax laws, all portrait and wedding photographers dealing directly with an end purchaser (their client) must charge and collect sales taxes (it’s 6.5% here in Cincinnati).
* When would a service NOT be taxable? The way I understand it, if the service does not contribute to the creation of a new, tangible product. Take dance lessons, for example. No new product is created when someone receives dance lessons (unlike photographic services) so the service is not taxable.
After you have charged and collected the sales taxes from your customer, you must send them to the State on a schedule they provide. I believe that, in Ohio, they start new businesses out paying sales taxes quarterly, then adjust your schedule using other criteria. At one time my photo studio (Daylight Photo) was only required to pay sales taxes twice a year. That was tough because we had to store thousands of dollars in taxes for months on end. That can be hard to do when cash flow is tight and other bills need to be paid. Now we are allowed to submit our sales taxes every month and it’s much nicer since we’re only storing the money for a short time.
The bottom line is that, in my locale, all photography goods and services are subject to sales tax. If you are providing the goods and services directly to the end user then you are required to collect and submit these taxes to the State. If you are shooting for an ad agency, or stock agency, though, then you are not selling to the end user, the agency is. So it is the agency’s responsibility to charge and collect the sales taxes on what you’ve produced.
I told you this could be perplexing. Next we’ll talk about whose responsibility it is to collect and pay the sales taxes.
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