Posted by Paul DeCesare on September 18, 2010 at 1:10 AM
Does anyone (who sells images) know if you have to charge sales tax if you deliver images online via download, such as wedding images, etc? I assume a tangible thing like an album or even a DVD requires sales tax, but I'm cloudy about digital delivery.
Posted by Mel Ladewig on September 18, 2010 at 10:10 AM
If you and the buyer are within the same state, then the good is taxable. Services are not subject to sales tax. I'm fairly certain that digital images like e-books and or MP3 downloads would be considered a good. Digital processing would be considered a service (as is film processing for example).
Technically, in many states, if you don't charge the tax, then the buyer is responsible to report and pay the sales tax themselves.
Posted by Neil Corman on September 18, 2010 at 11:56 AM
This issue is something which came up recently due to the state cracking down on the sales and use tax. Photographer Dann Coffey ran into the issue with an audit (Denver Post).
I would recommend asking someone who knows the specific laws of this versus the forum which is going to tell you what people are doing and not what is correct. You could also attend a free class offered by the state and most home rule cities where they would explain everything you need to know plus more, and could always raise this question. I would wager a beer with someone a majority of folks don't know what use tax is and if they need to pay this to the state and cities they reside.
Posted by Paul DeCesare on September 18, 2010 at 12:32 PM
Neil, that is one seriously eye-opening article. As it stands, the shoot is a service, the post processing is a service, and licensing images for use is a service, so technically Dan does NOT owe anything. But like the bully in the neighborhood, the top brass appears to just be folding their arms and saying "Nope, you owe us, pay up". What's bad for Dann is that they now have a bottom-line figure to collect regardless of how they got there, so he's now a Case Number in the system, not a human. Given the strapped budgets everywhere it's no surprise that CO is hounding Dann and others, but I'd like to audit THEM and see how they have spent the taxpayers' money to begin with. It's easy for a government office to blame "the economy" for having no cashflow when the source may be the spending habits in the first place... then people like Dann have to foot the bill. What a mess.
OK, rant over! On the other hand, we are quickly turning into a digital world where information is almost the commodity, so it would be unwise to think that digital delivery will be a protected asset. I realize now based on what Mel wrote that I do pay sales tax on iTunes downloads, never really gave it much thought.
In the end it just seems to be easiest to just charge tax to the customer and keep auditors off your back. I doubt we'll lose that many customers because of sales tax. I'll have to ask a tax attorney one important question: if I shoot images for a real estate client in a different county, do I charge them the sales tax rate of my county or theirs? I think this needs to be mroe complicated, we're not quite there yet...
Or, we can all just move to Oregon. There you go, problem solved!
Discussion
3 repliesTechnically, in many states, if you don't charge the tax, then the buyer is responsible to report and pay the sales tax themselves.
I would recommend asking someone who knows the specific laws of this versus the forum which is going to tell you what people are doing and not what is correct. You could also attend a free class offered by the state and most home rule cities where they would explain everything you need to know plus more, and could always raise this question. I would wager a beer with someone a majority of folks don't know what use tax is and if they need to pay this to the state and cities they reside.
OK, rant over! On the other hand, we are quickly turning into a digital world where information is almost the commodity, so it would be unwise to think that digital delivery will be a protected asset. I realize now based on what Mel wrote that I do pay sales tax on iTunes downloads, never really gave it much thought.
In the end it just seems to be easiest to just charge tax to the customer and keep auditors off your back. I doubt we'll lose that many customers because of sales tax. I'll have to ask a tax attorney one important question: if I shoot images for a real estate client in a different county, do I charge them the sales tax rate of my county or theirs? I think this needs to be mroe complicated, we're not quite there yet...
Or, we can all just move to Oregon. There you go, problem solved!