Sales tax for photographers
“Sales tax for photographers.” Your first instinct might be to run for the hills, but sales tax is definitely something you need to understand as a business owner. During the past few years I have seen countless photographers ask about sales tax in online forums and groups. All too often the conversation includes at least one photographer having what I call an “oh crap” moment in which they say, “Huh, I had absolutely no idea I was supposed to collect sales tax!” Here is an example:
Amy spent four years building her wedding photography business and things were going great. Her booking percentage was high and she had worked hard to improve her album sales process, which helped to significantly increase her annual gross revenue to $150,000 in 2011. Then one day she received a letter from her state tax office informing her that her business was selected for a sales tax audit. During this audit, she discovered she should have collected sales tax from her clients on not only her album sales, but also on the photography services she provided. She had erroneously believed that her photography services were not subject to sales tax and now she owed the state over $25,000 in unpaid sales tax, plus fines and interest!
I don’t want you to be in Amy’s shoes. I don’t want you to be the photographer who fails to collect sales tax from your clients and finds out too many years down the road that the state is coming to audit you and wants its money. The tax money that you fail to collect comes straight out of your pocket. Sure, you can try and find your clients and ask them if they will pay the sales tax you mistakenly didn’t collect from them two years ago…good luck with that! They are under no obligation to pay it.
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Linda — in regards to California — services can actually be taxable when they are so closely connected to the tangible product/item that is produced. It’s called fabrication labor in California (and in many other states). You will want to check out the California specifics because if audited, the CA BOE is tough and if you didn’t collect sales tax on services which should have been taxable, they will definitely want their money…
Here’s a publication: https://www.boe.ca.gov/pdf/pub68.pdf
And I also have a sales tax guide available for California that tells you all you need to know: https://www.niftyknowledgerocksshop.com/products/california-sales-tax-for-photographers
Services for photographers is specifically exempted from sales tax in the State of Missouri. Hourly and daily rates for wedding or commercial photography are not subject to sales tax if they are separately-stated from finished photos. Make sure your packages are broken down on your invoices to aid in the claification of this as well as useful in the event of an audit. Additionally, the portrait sitting fee, photographers’ consultative fee and photographic services up to the point of previews are not subject to sales tax. Charges involving labor for producing finished photographs are subject to regardless if they are separately-stated or not. (Letter Ruling No. LR3714, Missouri Department of Revenue, April 4, 2007, ¶202-688)
You should check with your sales tax office and check on this state to state.
Richard Shoaf, Signature Artist
RS7 Studios – Photography & Cinema
Lake Saint Louis, MO
Check with your local state sales tax entity. In California, services are not taxable, although tangible property is. So if you sell a photo album to a client, that’s taxable. However, the photography service you provided to produce that album is not taxable.