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Ours didn't. He just worked it out of his fee.
Ours is not charging tax, but our photographer is in NY and we're in PA, which is why (I think).
We were not given photos or albums (not part of our package) just paid for her service. So there was no tax. If its only service, I would say that you should not be charged tax. If the photog is providing albums and prints the amount of tax should be based off the price of the album and prints.
ours did not charge us tax! i'm going to ask FI (accountant) why some do and some don't though...
Thanks Ladies! You are all so helpful!
@OttawaBride2011: Thanks for asking your FI why some do and some don't! I would love to know why. :)
I am just starting a photography business and had to get an accountant to help me figure out the tax laws because it is CONFUSING! What she told me is this:
My photography services have two parts: a service (taking the photos) and a product (the photos themselves). Even if you don't give physical prints, you are still giving digital files, which are a product, which is taxable. To avoid charging tax on my time, she suggested I charge an hourly rate (nontaxable) + a product rate for the prints. So for example, I would charge 100/hour for my time and then $10 for a dvd with the high-res prints, and just charge tax on the $10.
We were taxed on the whole bill too. Hmmm...I didn't even think about it before but now I'm wondering if that was appropriate.
We were taxed on the entire bill as well. I remember being really surprised, but it makes sense since photos are actual products.
@Miss Chapstick - But the total bill includes the fee for the services (taking the pics) and the pics themselves (or the digital files or whatever). I would think we should only be charged tax for part of the bill, not the whole part.
Ours charged tax, they have to because it gets reported to the state. It would be illegal not to - maybe some photographers work in the sales tax to the overall price so it would be "inclusive"
I do tax reporting for a corporation, and I believe a photog should not be charging you tax for their services. Handing you digital images doesn't work as taxable either, because you will be charged when you print them, not before. If you never print them, then only the DVD that they are sitting on is a "tangible product" that can be taxed.
If you were charged tax on your entire bill, I would revisit that. Now, there is a charge that some places add called a "service fee" and that is completely arbitrary usually. Another way a photographer can get away with charging tax on more than just the DVD they handed you is by saying the pictures on the DVD make it worth a certain amount of money (ie: $1000) instead of just saying the DVD is worth $3. But this shouldn't work, as you would technically need to have the digital photos appraised.
It can get really convoluted. I would stick with a photog who either roles taxes into the package cost, or clearly defines what they are charging tax on, and at what rate its being charged. It could differ state to state, I have experience in two states only for sales and use tax reporting.
3% tax, I forgot why it was so little. I looked it up but forgot why. :p
Ours had to charge tax (legally) if they handed over anything, like a DVD or flushmount, whereas if we were to download images that they uploaded, we would not have been charged tax.
Every photographer I talked to gave us a rate and then said "Local & State sales tax applies."
@Fifty: The photographer we eventually hired is from an area with high sales tax, but was able to charge us a super-low tax on the package. Apparently where he is from, a wedding package qualifies as a "mixture of goods & services" and is subject to a rate. If we were to buy an album or something after the wedding, we'd have to pay full sales tax. Maybe that's what your photographer is doing?
My photographer did not include tax. I also agree with mskalinin that they should not be taxing you on the service portion. You don't get taxed on your haircuts, so why would a photographer tax you for their time.
Yes, charging tax is common because tax has to be paid to the state. Some roll it into their package price, some charge on the whole thing, some only charge on products. If your photographer wasn't from your state, you shouldn't have to pay tax to them because they don't have to pay tax on you. They only are required to charge tax on items retailed in their state.
Also, MsKalinin, the reason photogs charge, say, $300 for a DVD of images isn't to tax the cost of the disc above and beyond the cost of materials. The images on the disc do have a value. i.e., if the photog just gave you the disc, they would be giving their work away. Most photogs sell their images as well as their time: as prints, albums, or canvasses. Figuring the cost of these items (often 3x or more of wholesale to account for cost, tax, and profit) can be complicated when it comes down to something like selling a cd of images. How much is it worth in prints? How much is it worth in time? What is the monetary value of each image? That's a tough one to figure out, but that's why a lot of photogs sell image discs or only include them "gratis" in larger packages.
Does that all make sense?
I'm still trying to figure out the goods/services sales tax bit myself, but most invoicing and studio software will allow you to differentiate goods vs services and charge tax on one, the other, or both.
I looked a lot of photogs and i would say about 80% charge tax on top of their quoted prices for me and 20% had tax include in the price they gave to me, usually the non-round numbered ones were the ones that already had tax included. You have to ask because I guess it's not standard to include tax in the price or not. ^_^
I looked into this a little more, and I'm still digging around to find if there are national standards for charging sales tax on products vs. services vs. the entire quote. A quick search turned up a statement that it varies by state:
"In many states, you are required to collect sales tax from the customer on the full contract amount, with no exclusion for the “shoot.” Generally this tax is based on the state, province or country to which the album is delivered; where the customer resides, so check the local laws."
It also probably varies by photographer because some are more knowledgeable than others, and some probably run their business better than others. :)
I'm a CPA and everything that Corgi said is correct. Almost universally, there is no sales tax on services, but there is a tax on a product.
Does anyone have a source where I can look up what the regulation is in California? I was also wondering if the tax charged was the rate where the photographer's business is located or where the work is done?
Can someone interpret this please? It's from CA tax law.
SERVICES — The sale of services where no tangible personal property is transferred or where the transfer of property is incidental, are not subject to sales and use taxes. Persons providing services are consumers of property used in their business activities. However, persons who engage in service operations are retailers of any supplies or other tangible personal property sold to their customers or clients, and tax applies to gross receipts from such sales. Certain services, however, are defined as sales of tangible personal property. For example, the fabrication of tangible personal property for a consumer is defined as a “sale” even when the consumer provides all the tangible personal property used to fabricate the end product.
hmm.. does the same tax rule apply to videographers?
for example, if i hire a videographer to shoot at my wedding for 8hrs and order an edited dvd from him, should the 8hrs be tax free?
@TingTing I think it's any service. http://www.boe.ca.gov/sutax/faqpurch.htm
It really depends on where you live...but Cherry Pie is right. She and I live in the same state (WA)...and here you have to charge tax. It depends on where you live.
So yes...it is normal that you were chaged tax. You are not being taken advantage of
i just found this online and is applicable in California: http://www.boe.ca.gov/pdf/pub68.pdf
according to that document, the "service" part of photographer and videographer is TAXABLE.
Oh ok. I was looking at Publication 61. At first it seems like only the actual photgraphs are taxble, but it gives an example at the end of page 5, and it's pretty clear that pretty much everything is taxable.
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Hi Bees,
My fiance and I are looking at wedding packages. I was surprised to see that photographers charge a tax on their services. Did your photographer charge you a tax on your wedding packages? Were any of you able to waive the tax fee?
Thanks, Ms. MJ!