Where is Photography Sales Tax Charged?
They say two things in life are certain: death and taxes.
While having to pay taxes IS certain, it isn’t always clear how much you owe, to whom, and when.
There is a reason there are people whose profession it is to navigate the tricky tax code!
So maybe you are just starting your business and want to figure out your initial sales tax obligations.
Or maybe you have been hired to photograph a wedding in the next county or even another state and need to figure out what to charge and who to pay.
Let’s begin with the basics!
What is Sales Tax?
First things first! Sales tax is a tax imposed by state and local governments at the point of sale. The purchaser pays the tax, which is a set percentage of the good or service. The business owner is required to assess the tax, collect it, and pay it to the government entity at the required time. In most states in the U.S. sales tax is required to be collected on the entire sales price of the shoot (including the sitting fee, so be sure to collect tax on both the deposit invoice and the ordering invoice). If for some reason you end up not selling any images (for example if the customer forfeits their deposit) you do not have to collect sales tax on the sitting fee and can refund any sales tax or keep the sales tax and include it as your income.
This means that as the photographer and owner of your business, you are required to charge your clients the applicable sales tax and pass it off to the right government agency. Sounds straightforward, right? Well…there is more!
What Government Entity Do You Pay and at What Rate?
Sales tax rates and laws vary not only from state to state but can vary from local jurisdiction to local jurisdiction as well. Some of the various sales tax situations that may exist include:
- A state may not charge sales tax, but the city or county does.
- A city or county may not charge a sales tax, but the state does.
- The state and local governments may charge sales taxes.
- A state or local government may exempt certain items/services from sales tax or have different rates for different items/services. For example, a service (taking photos) may not be taxed, but the product (CD of images) is taxed.
Yikes! That is a lot of potential variation!
In addition to figuring out who to pay what, many jurisdictions require the business owner to obtain a sales tax permit/license. This permit/license allows you to legally collect the tax and report to the jurisdiction.
When Do You Pay?
Most jurisdictions require a sales tax payment from the business owner at set intervals, most often monthly, quarterly, or annually. Of course, this will vary from place to place, including differences in requirements from the state and county. Make sure that you know your jurisdiction’s requirements and pay on time otherwise, you may face penalties.
Selling to Clients Out of State
Now comes the tricky business of when you are conducting business outside of your place of business, whether that means another city, county, or state. The first determination you must make for this situation is whether you have a ‘nexus’ in the jurisdiction. In other words, do you have a “brick and mortar” office in that place? If yes, then you MUST collect sales tax in that jurisdiction. If not, well then you still MIGHT have to pay sales tax in that place. Again, it depends on the laws of the jurisdiction. Some might require you to collect sales tax even if you are only there for the day shooting a wedding and some may not! You will have to check with the applicable governments to make this determination. This information should be widely available on the applicable government’s website. You can find more information on nexus in a state by going to the Sales Tax Institue’s website
Sales Tax Help With Online Sales
Many photographers today are utilizing online print sale/storage websites for their businesses. Many of these websites provide some help with sales tax. Some allow you to input your specific jurisdictions or choose a specific tax rate for your sales. They will then collect the tax for you and either remit the sales tax money to you so you can pay the appropriate jurisdiction, or some will even file the sales tax return for you.
SmugMug has this article: Charging State Sales Tax on Online Print Orders
Moral of the Story
Does this sound like too much and maybe you will just hope nobody notices? DON’T DO IT! It is worth the extra effort to determine what tax you have to charge and pay because there are more audits today than ever and you don’t want that headache! Make sure to check with a local CPA or with your state sales tax office to learn EXACTLY how sales tax for photographers is handled in your area!
Interested in learning more about taxes and your biz? Check out LegallyLegit, our comprehensive course on running your photography business legally!
