When you buy a shirt, you pay sale tax. When you buy a car, you pay sale taxes. When it comes to wedding photography, you pay sale tax… or don’t you? This matter is so complicated and usually misunderstood.
While many of our clients expect that they will pay photography sale tax, over the years, many others were surprised to know that they have to pay sale tax. They were confused and seemed unhappy to pay for their wedding photography sale tax. Many others just left and went with other photographers who they said didn’t charge sale tax.
A disclaimer: We are photographers, not lawyers. All information provided is for self-help and general informational and educational purposes only. Law is always changing. This is not legal advice. For legal advice, please consult your attorney.
“Why do you charge photography sale tax?”
Because we are required by the LAW. Our wedding photography business is lawfully registered and we comply with the law to protect our business as well as you. According to Publication 68 of California State Board of Equalization:
“Portrait, wedding, and other noncommercial photography
When you sell art prints or shoot photographs for non-commercial use, the taxable amount of your charge will generally include all of the following:
• Your charges for the physical product you transfer to your customer.
• Any labor and services involved in producing or fabricating the photograph.
• Any reproduction rights associated with the photograph.”
As you can see, photographers don’t charge tax to increase their profit. It is actually a law which requires them to charge tax on applicable packages. Furthermore, whatever sale tax they charge, it goes to the right government agency and they keep nothing.
Which packages are “applicable packages”?
This is where the complexity kicks in. To make it simple, if a package involves a physical product, sale tax is applied. If your photographer charges sale tax on packages that have physical products, don’t freak out. Indeed, make sure your photographer charges sales tax. It’s a good sign to know that you are working with a professional who runs a legitimate business. States & government increasingly audit small businesses like photography businesses. Does it worth the risk of never getting your photos because he/she was audited and bankrupted? No, it’s not worth it. Trust a professional and pay the tax.
“The other photographers say sale tax is included in their packages.”
Many photographers say they include sale tax in their packages so that you don’t have to pay extra. We believe they can do that. But if they say so, they should write down the exact amount of tax they charge on the contract. If you don’t see it, they might be lying to you. You wouldn’t know if they will file it with the government, or they won’t file at all and keep everything (which is a BIG NO for a legitimate business to do).
We are not them, so we don’t know how they can work it out. One thing we know is if the tax is included in the total as one single number, it is really hard for our bookkeeping and tax filing. Maybe they have a way to do it, we don’t know. But in our experience, when the number is separated from the beginning, it is more transparent and much easier to keep records and file tax. Just like many receipts you have, the tax is clearly separated.
Let’s take an example of a package worth $3000, our contract will look like this:
Package details: [description of package]
Tax (9.25%): $277.50
If everything is not separated and only included in the total, at the end of the year, we have to re-calculate everything to find the correct tax amount. Isn’t it too much? So why don’t we just write them down from the beginning, right?
Our advice is if your photographer says their package includes sale tax, ask him/her to write down the tax amount. If he/she cannot, be careful and think again!
Once again: “Does it worth the risk of never getting your photos because he/she was audited and bankrupted? No, it’s not worth it. Trust a professional and pay the tax.” We can answer some questions about wedding photography sale tax, but your state’s tax board is the best place to go. The folks at California’s Board of Equalization are helpful and will gladly help you with any questions. Here’s their number: 1-800-400-7115. Better safe then sorry later.