Monday, September 6, 2010

FAQ: Photographers and Sales Tax

I am frequently questioned by my clients as to why they have to pay sales tax on their sitting fee-- since I am providing a service at that time, and not a product. Some feel that they should only be paying sales tax on the prints or print value in their package, not on the creative fees and photographer's time. I have even been told by clients that if I charge them separately for the services vs. the products, that they only need to pay sales tax on the product.

In the state of Texas, photographers are directed to collect sales tax on "all expenses directly related to the production and sale of photographs". Anything that's billed to clients is taxable... which can include travel, location fees, meals, parking, etc. It doesn't matter if the client is paying an hourly fee, or of he/she is paying an itemized list of expenses; their total is still subject to sales tax.

Charitable organizations, schools, churches, and any others who can provide tax-exempt paperwork do not have to pay sales tax. The only other exception to the sales tax is a situation where an individual or organization is purchasing photography services for the purpose of manufacture/resale. For instance, a newspaper/magazine, someone looking to use photographs in a calendar they will sell, or someone procuring my services to use the photographs in a book that will be sold would not pay sales tax. Essentially, since it's part of the process where there will be an end-product sold that is taxed, this is not taxable.

If a business is paying me to shoot headshots of their employees, and these shots will be used on their website, business cards, and promotional materials... then tax is applicable because the final products are not sold and taxed.

All regular consumers must pay tax on photography services (unless the end-user is a tax exempt organization). This includes portrait clients, wedding clients, and just about everyone else. Texas has even made it illegal to list "tax included" rates for consumers-- the tax must be listed out as a separate line item on any invoices or detailed receipts.

If you would like to hire me to consult on wardrobe, teach you how to use your camera, or help you design a studio, those true "services" would not be subject to sales tax.

Here's a link to the great State of Texas's comptroller fact sheet about photographers and sales tax... enjoy!

1 comment:

Michelle P. said...

I'm glad I'm not one of the questioners about taxes - I ask enough questions as it is! But this is a super helpful blog for your customers AND other photographers.