As if the 3.2 beer isn’t enough of a deterrent to photographers living and working in Utah now the state is trying to collect from photographers, who they feel don’t do a very good job following their tax law. The timing of this is unbelievably absurd.

Here’s a couple of nuggets from the FAQ’s of the state of Utah’s self audit of the business of photography (here):

Q: Isn’t photography a service? Why should sales tax be collected on a service?

A: The object of photography is to provide a customer with a photographic image, the sale of which is taxable whether delivered as tangible personal property or as a digital image.

Q: I sell licenses or rights to my photographic images, not the images themselves. If there’s no print, isn’t it nontaxable?

A: No. The sale of “stock photography,” the licensing for either permanent or limited use of a photographic image, is subject to sales tax, even if electronically transferred as a digital image

More pain after the jump.

February 19, 2009

Name
Address
City, State  Zip

RE: Verification of Sales and Use Tax
Letter ID: PH2070000

Dear Name:

The Auditing Division of the Utah State Tax Commission is currently conducting a self-review project on photographers and related businesses.  A self-review project consists of selected businesses or individuals reviewing their own books and records for a potential sales and use tax liability.  Self-reviews are designed to help you become familiar with the tax laws that relate to your business, and assist you in future compliance to help you avoid penalties and interest.

A photographer sells photographic images and other related items.  A photographer may also render services such as developing, retouching, and tinting.  These sales and services are subject to sales and use tax, and the photographer is responsible for collecting the tax from the customer.

Items of tangible personal property purchased without tax and not resold are also subject to sales and use tax.  As the purchaser, you are responsible for the tax on items you store, use, or consume in Utah, and you must remit this tax to the Tax Commission when the seller does not collect it.

What you should do:
Please read the enclosed Examples sheet.  It lists some common types of sales and purchases made by photographers that are subject to sales and use tax.  Responses to Frequently Asked Questions are also provided for clarification of certain issues.

To perform the self-review, please follow the Instructions included in this packet.  The enclosed Checklist & Questionnaire outlines the forms you will need to complete and submit.  It is important you return the completed forms in the envelope provided, along with your payment of computed tax and interest, if applicable, by March 23, 2009.

Name
February 19, 2009
Letter ID: PH2070000
Page 2 of 2

If a careful review of your records shows that Utah sales and use tax was always properly collected from your customers and reported to the Tax Commission, and use tax was reported for all cases where the seller did not charge you tax on a taxable purchase, please
do the following:

1. Fill out the Checklist & Questionnaire.
2. Complete the Summary, including Section C, indicating why you owe no tax, and date and sign.
3. Please return the above documents in the envelope provided by March 23, 2009.
Please note, all self-reviews are subject to verification by auditors.  Any tax self-reported and paid as part of this self-review will be subject only to interest, and the review period will be limited to three years.  However, if you do not respond to this notice, we may contact you to schedule an audit.  If no sales and use tax returns have been filed, the normal three-year statute of limitations does not apply and the Tax Commission may assess tax, interest and penalty for an unlimited period.

Interest has been calculated to March 23, 2009.  If payment is made before that date, you may reduce the interest amount accordingly.  Please read the enclosed Instructions for details.  Please note that if payment is made after March 23, 2009, you must adjust the interest and pay the proper amount, or additional interest and a late payment penalty may be assessed on any deficiency.

If you have questions or need additional time:
Email us at comp@utah.gov or contact one of the following from 7:00 a.m. to 6:00 p.m., Monday through Thursday:

Matt Duke   (801) 297-4670
Stephen Peterson  (801) 297-4758
Ralph Hoggan  (801) 297-4759

Information to help you complete this self-review can be found on our website at http://tax.utah.gov/selfreview (select the Photography link).  You may read related tax references in Title 59 Chapter 12 of the Utah Code, Administrative Rules R865-19S-75,
R865-19S-110, R865-21U-6 and other applicable Administrative Rules, which are found on our website at http://tax.utah.gov/.

Thank you for your prompt attention and cooperation regarding this matter.

Respectfully,

Michael Christensen
Tax Audit Manager

Enclosures
mbd

What sales are subject to sales tax?

Taxable

The seller must collect sales tax on the following products and services:
Photographs, whether as prints, proofs, CDs, negatives, slides, digital images, electronically transferred, or in any other form
Videos, whether as tapes, DVDs, films, electronically transferred, or in any other form
Processing or developing film or negatives
Printing, enlarging, retouching, tinting, or coloring photographs
Stock photography, or a license to use a photograph
Any other sale of tangible personal property (frames, albums, cameras, film, etc.)

Sales tax must be collected on the total sales price of photography.  The sales price includes any expenses of the photographer that went into producing the photography, even if they are stated separately on the customer’s invoice.

Taxable components may include:

Sitting fees, hourly fees, creative fees, etc.Fees for models, props, stylists, wardrobe, makeup, equipment rental, etc.
Travel expenses – lodging, meals, mileage, transportation, etc.
Taxes or fees paid by the photographer
Sales to out-of-state customers are nontaxable.  However, if transfer of the property occurs in
Utah, the transaction is taxable, even if the buyer intends to take the property out-of-state.
Certain sales within the state of Utah are exempt from sales tax if the purchaser provides an exemption certificate.  These include:

Sales for resale by the customer (i.e. developing photos for another photographer who will resell the photos, selling prints to a gallery, etc.)
Sales to United States and Utah government agencies (but not to agencies of other states), if the purchase is paid for directly by the agency
Sales to Native American tribes or tribe members, if the sale is made on the tribe’s reservation, or the purchased item is delivered to the reservation
Sales to religious or charitable institutions, if the sale totals $1,000 or more, or is pursuant to a contract between the seller and purchaser
Sales of videos for commercial distribution (see Frequently Asked Questions)

Exemption certificates are available online at http://tax.utah.gov/forms/current.html.  For more information regarding exemptions, please refer to Publication 25.

Note:  Sales made to advertisers are not sales for resale.  Purchases of tangible personal property by an advertiser are considered used or consumed by the advertiser, and are subject to sales and use tax.  Photographs sold for use in newspapers, magazines, periodicals, and other publications are taxable.

Certain amounts are not considered part of the sales price, and are not taxable, including the amount of any discount, delivery charges, and charges for late payment.  Charges for distinct services unrelated to providing a product, such as consulting work, are not taxable.

What purchases, leases, or rentals are subject to sales and use tax?

Taxable
Camera equipment, accessories, projectors, lenses, filters, printing equipment, trays,
darkroom equipment, etc.
Computer equipment, prewritten software and upgrades, digital memory, etc.
Backgrounds, props, lighting equipment, bulbs, etc.
Furniture and fixtures
Office equipment and office supplies
Photo developing chemicals, masking tape, darkroom supplies, etc.
Cleaning supplies
Film (unless for resale)
Promotional materials and complimentary items (calendars, t-shirts, brochures, business cards, postcards, mugs, etc.)
Magazine subscriptions, books, publications
Prints and proofs for photographer’s use
Items originally purchased tax-free for resale that are withdrawn from inventory to be used or consumed by photographer
Other tangible personal property purchased to be used or consumed by photographer, including Internet purchases*

Nontaxable
Purchases for resale that become a physical component of the finished product you are selling:
prints
proofs
photographic paper
photo paper for digital prints
blank CDs/DVDs
packaging materials
mounts, frames, albums, etc.
Advertising fees (newspaper, magazine, radio, television, internet, etc.)
Professional services (legal, accounting, etc.)
Insurance
Membership dues
Custom software
Newspapers or newspaper subscriptions
Repairs and services to real property (cleaning of building or property, trash removal, building repairs, etc.)
Purchases, leases, or rentals of equipment for primary use in production or postproduction of media for commercial distribution (see Frequently Asked Questions)
Separately stated delivery charges
*Purchases made on the Internet are treated the same for sales and use tax purposes as any other out-of-state purchases (for example, catalog purchases from out-of-state, etc.) and payment of the use tax to the Tax Commission is required if the seller does not collect the tax.

Please be aware these examples are NOT all-inclusive.  These lists are intended to provide you with general guidelines regarding the taxability of your sales and purchases.  If you have questions, please contact us at one of the numbers listed on the cover letter, and we will be happy to discuss them with you.
Additional information may be found in Administrative Rules R865-19S-75, R865-19S-110, R865-21U-6, and Publication 25.  These references and other supplemental research sources may be found on the Internet at tax.utah.gov.

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77 Comments

  1. Well, that about kills off any interest in ever moving to OR shooting in Utah.

    Can you say, IDAHO or ALBERTA for your next outdoor lifestyle or ski shoot.

    Virginia audits an industry every year. About 15 years ago, just about every photographer in the Commonwealth of Virginia was subject to an audit.

    The rules set up by the tax department in Virginia were complex, contradicted themselves and were difficult to understand.

    Many photographers gave up and started paying sales tax on gear and film or supplies. They then charged sales tax to clients unless the client could provide a sales exemption.

    Utah is being penny wise and pound foolish.

  2. Luckily I have special underwear that exempts me.

  3. It gets even worse. Utah is now considering adding a tax on caffeine. But there is talk of doing away with 3.2 draft beer.

    • @Roger, you know you “got to bleed the beast”

  4. I would be curious how many photographers (nationwide) who are reading this Photo Editor post are even registered to collect and pay Sales Tax in their respective states, and how many even have business licenses?

    Don’t everyone raise their hands at once.

    One other interesting paragraph in that Utah ruling is the fact that they consider Advertising Agencies to be the one that “consumes” the photography, and that Sales Tax should apply to them, even if they’re in the same state as the photographer. Much of the time, the agencies want to claim “Resale” as their status. I’ve always disagreed with their interpretation, since they do not resell what I deliver to the agencies; they take that chrome or that digital file and they change it into a color separation, and therefore, they do “consume” it at that point.

    This whole Sales Tax issue is lying in wait. Amazing that so many states are crying “no money” while at the same time not enforcing the laws already on the books, that could create revenue for them.

    How many people here voluntarily pay the sales tax in their own states that they don’t pay when they order expensive gear out of state from B&H or Samys? Don’t answer that.

    Watch your backs, boys and girls. Hope that your instate Tax Revenue guy is not an amateur photographer, and is reading this post. It’s lying there in the grass, ready to bite you in the ass. Cross those “t”s and dot those “i”s.

    • @Reader, to preface, as of 2008 I have been operating with a business license.

      Two initial reactions for whatever they’re worth…

      One might say that UT is ‘professionalizing’ much of the non-professional industry. Assuming people pay attention to the law, competition among/against photographers who charge (our friendly dentist who shoots portraits and weddings on the side) would go down.

      The flipside is that the number of non-pro’s who charge would go down as well (it’s not worth the $50 licensing fee, so i’ll just give it to them for free) so competition against non-charging photogs would go up.

      Of course, no one pays attention to the law. The people who aren’t charging, or are charging very little, probably don’t bother to put that income on their taxes anyway. And the poor photographer is stuck paying additional taxes (or adding cost to his product).

      Bleh!

  5. Haven’t had time to research this myself, but can anybody here explain how Utah tax law is somehow different from the other 49 states?

    • @Daryl Lang,

      With all due respect, Mr. Lang, it’s about reporting on topics that truly affect working photographers today, rather than your hard-hitting post today:

      http://www.pdnpulse.com/2009/03/first-polaroid-now-this.html

      So it this the new journalistic strategy of PDN? To look to Rob Haggart’s site, to see what real photographers are talking about, and then take your journalistic lead from that?

      Every photographer that I know wants PDN to succeed, and remain pertinent, but most everyone just rolls their eyes at the mention of PDN lately. How about a new photo contest on Best Photo Of Utah Photographer Getting Audited?

      • How about some exclusive research on how emerging photographers are faring in the recession, available at no cost to you? http://is.gd/nfYs

      • @Wanting Relevance,

        Uh…
        what’s up with giving Daryl Lang the high hat?
        Unnecessary.

  6. It’s precisely this sort of thing that gives me hope that a nationwide sales tax on web sales won’t happen soon. Can you imagine trying to harmonize the tax policies of all fifty states, much less different jurisdictions within those states?

    Amazing that governments haven’t yet learned that complexity means decreased tax collections, even when the taxpayers are trying like hell to comply. My state, like many others, is in dire financial straits; but it has a byzantine, out-of-date tax code that hasn’t recognized the shift of the economy to services rather than goods. The legislators in my populist state are too busy trying to look out for the “little guy” and to make sure some poor “rich” guy pays every last farthing of his “fair” share to realize they’d have a flood of revenue if they just moved to a flat tax.

    They’re not that clever, alas. Pitting groups against each other gets them more political traction.

  7. With #5, I wonder the same thing – is this really that unique to Utah? I’m asking because I don’t know. It’s hard to believe that this isn’t also addressed elsewhere.

    As a Utah photographer this self-audit definitely concerns me, but seems like it won’t affect most of my work which is for out-of-state agencies and clients.

  8. Good luck with Uncle Sam trying to rape all of you yet again.

    When will you stand up to the fact that income tax is not constitutional?

    • This discussion is about State Sales and Use Tax and not Federal Income Tax.

  9. So, not only do you pay taxes on the items you buy…but you also have to report what you buy and pay more taxes on it? Is that what they are saying?

    #6 There was talk of a flat tax(If I remember right in 2006), – 17% sales tax on everything. That way they get their money and then you get to keep what you work for(If you work 40 hours, then you keep all of it)

    But of course due to the highly political and corrupted government that won’t happen. That’s just way to easy for everyone else. They always have to make living a hard life.

  10. This is very similar to a battle we have been fighting in Arizona over the last few years. Believe it or not, not all states consider commercial photography a service.

    It’s a very long story here in Arizona that involves the Phoenix ASMP chapter and a lengthy lobbying effort to unsuccessfully change the law. I would be more than happy to prepare an official version of events in an effort to educate people about what we have been through. Feel free to contact me if you are interested.

  11. Similar to Mark Peterman’s story, (#10), we had a mess here in the state of Tennessee several years ago. The tax code here was antiquated, and commercial photographers were lumped into the same category as Olan Mills photographers. (I’m sure they still are, in the year 2009). It was further complicated by the fact that several occupations here do not charge sales tax because they’re considered a “service”; ie, hair salon owners; attorneys (surprise surprise).

    Several photographers that I know personally considered what they did a “service” as well, but they did their invoices this way: They did not charge Sales Tax on the Creative Fee, but they did charge Sales Tax on their line-itemed expenses. One day, the local Revenue department got a hankering to do audits on most every photographer, and several of them were, honestly, hit pretty hard, in that they had to pay back taxes on the tax on their Creative Fees that were not charged originally. Some as far back as five years.

    Honestly, when I read over this Utah interpretation, it does not seem very different at all from Tennessee. And it’s been that way for years here. You just deal with it, charge accordingly, and anyone that refuses to pay, claiming “Resale”, then make damn sure you have a current Exemption Form in your files from them, to CYA.

    Here is my advice:

    1. Do your homework. Investigate your own state’s interpretation.

    2. Know that the law is enforced with subjectivity. We used to have a joke that, with Tennessee Sales and Use Division, you could call them on the phone at 9am, and ask how commercial photographers should charge for sales tax, and then you could hang up and redial the number at 9:10am, ask the same question, and you’d get a completely different answer.

    3. Keep good records.

    4. If a client in is your state, but claims Resale, get a Certificate of Exemption from them and guard it well.

    5. Charge sales tax on your entire invoice. (Unless the client is out of state, and the job is delivered out of state).

    5b. Another weird one: Tennessee law makes the distinction not where the receiving client is located, but where the job is physically delivered. If you do a job for an out of state company, but deliver the job to their local branch office in your same state, then they want the job taxed. (Go figure).

    5c. Imagine how complicated it could get if you FTP the job. (Where is the server located?)

    6. They seem to make no distinction between delivering physical prints and licensing an image for a limited time.

    The only solace that I take is that I don’t live in the Republik of Kalifornia, which seems to have the most severe tax reputation and enforcement in the kountry.

  12. I’m a commercial photographer/studio owner in Arkansas, and as in @10, ALL photography is taxable in Arkansas. I was audited, and the state tax geek told me I needed to pay sales tax on all invoices from the past 4 years. Rude awakening. I fought the decision, lost, appealed, lost, all based upon the Utah FAQ arguments.

    What’s REALLY F’d up is that in Arkansas, if an Ad Agency/Creative firm shoots in house the service is tax exempt. Graphic design is also tax exempt. I pointed out to the judge, with several examples, that in many instances an illustration either A: created from a photograph and/or B: illustrations are no different than photography in end use in an ad or editorial content, so why would one be tax exempt and the other taxable. I also explained that I’m automatically at a competitive disadvantage because my rates are automatically 9.5% higher than a firm that offers in house photography, or a graphic designer offering illustrations as a substitute for photography. No Dice. It basically came down to an antiquated law and a bunch of older folks who do understand (nor do they care to) the work flow and technology of today’s creative industry.

    @11 nailed it. Luckily I did keep good records. Where I failed was doing my homework. I just assumed the service was tax exempt. Paying the back sales tax was a huge expense, but knowing that firms could offer the same/similar service without taxing pissed me off more than anything. I still loose sleep over it.

    It’s old news, but here’s some interesting information regarding sales tax and CA: http://www.sedlik.com/apa/tax.htm

    • @skool of hard knocks, What’s nice about California 1540 is that it makes a great argument not to transfer all rights, because doing so initiates additional tax liabilities.

      • @Gordon Moat, The beauty I find in CA 1540 is that it creates the category ‘commercial artists’ which, in my case, would create a level playing field for commercial photographers and graphic designers/Illustrators. Like I said before, I could care less about the sales tax (it’s paying the back tax that sucked for me), the tax is paid by the client, I just pass it on to the state.

        It’s knowing that there are people in the same state doing the same or similar work, which is being used in the same or similar end use, and they are not having to charge sales tax, making my rates 9.5% higher. Which really isn’t that big of a deal, it’s just the principle. Not to mention the whole WTF questions from clients wanting to know why I’m charging them tax when others aren’t.

        *Disclaimer-Lord knows I’m not whining. I fully understand how fortunate I am to be doing what I do. Regardless, some days sweeping floors and taking out trash sure seem attractive.

        • @skool of hard knocks, That’s the realm I began with after graduating in 1998: illustration and graphic design. Technically, since I send out ready to print files, and everything goes through PhotoShop, I am more of an artist with camera than I am a photographer.

          Of course, I also have to deal with Texas laws, since I spend part of the year there doing shoots. The only time it gets annoying is the entire interstate commerce issue. All this stuff makes me want to set-up a corporate location in Switzerland, and bill all my clients from there.

  13. @Mark Tucker and @skool of hard knocks: Informative. Thanks.

  14. I’ve been interning at newspapers and shooting weddings off the books for a few years but this year I decided to get everything on the books. But the sales tax issue has me confused.

    I asked my accountant and he called up the State Tax authority here in Florida, they said I need to pay taxes on everything.

    But as I ask around I haven’t found any other photographers that pay state tax and when I tried to add it to a commercial clients bill they balked and said no one had ever asked for sales tax before.

  15. Must be something to do with the Mason-Dixon Line and all those far-out-west commie bastard states. I’ve been paying on all services, actions, thoughts , real and implied for years now.
    Utah’s got those funny church people so them photogs should be punished anyhow.
    First it’s more then one camera (sick) to having multiple wives (cool).

    Visited_Utah_Twice :- were’d I get me some of those undies?

  16. The law is indeed Just Plain Dumb, but if you’re collecting the tax from the start up it’s no big deal…it’s just a pass through expense. Having to pay several years of back tax is what hurts.

    And I meant to reference @11 (not @10) in previous post.

    @14 see @11 regarding clients balking. It happens, and it sucks to deal with. I get it all the time. For many repeat clients I suddenly became a pain in the ass to work with simply because I was trying to follow the law. I was told by the State that even if a client had a tax exempt certificate it did not apply to this service because they were to pay tax on all consumables, which includes the photography.

  17. Photographers seem to be favorite targets of tax collectors in Washington state. I believe we can still avoid the need to charge sales tax on stock sales here. But years ago, they went after a local wedding photographer who didn’t itemize the cost of film on his invoice to the bride so they wouldn’t let him deduct it.

    Eventually, someone will have to take the time and spend the money to appeal some of these rulings to get things to change.

    I’m going through an IRS audit now – and it’s very, very clear to me that they aren’t the least bit interested in being fair. They’re only interested in collecting as much money as they can, anyway they can. Which of course tends to be the cause of people just avoiding them altogether.

  18. i live in utah and just got this same letter. luckily most, if not all of my clients are out of state so i’m not too worried about collecting the back tax. the thing that kills me is they want us to pay USE tax on all equipment and supplies we have bought out of state. that part blows!

    • @andy wright,

      One other word of advice to everyone, regarding Interstate Commerce: The tax people want you to keep current Certificates of Exemption for out of state clients, and also Proof of Delivery receipts as well, ie, Fedex Forms, dated, related to job name, to prove that job was indeed delivered out of state.

  19. Good to hear that our beautiful, but screwy state is not far off from the other 49. With that said, the aggressive, punishing interest due on items that are REALLY gray areas just sucks! I wish these conversations when on more often. Maybe there will be a photographers union one day.
    Tucker- entertaining as usual, informative too.

  20. The timing of this is very absurd. While the example letter you have show’s Feb 19, Mine is dated March 5 and gives me approximately 30 days to submit payment. I’ve already done my taxes for the year and now face not only paying more to the state but re-paying my accountant to go over everything again. Thanks for the coverage of this issue.

  21. I also had a similar problem with the State of VT. I lived in NH, but they said I had to collect sales tax on all sales to clients in VT since I “worked in VT” (ie. I did a photo shoot for a ski area). They wanted me to pay the sales tax that I did not collect from ALL VT clients for the past five year, plus interest and penalties, which totaled about $17,000. It was like dealing with the Mafia. By the way, the sate tax law said that only “tangible property” was subject to sales tax. They said that although I only licensed the use of an image, “it was based on something tangible.” Yes, but so is a phone call.

    • @David Brownell,
      I feel like I’m dealing with the Mafia as well. Makes you afraid to bill anyone for anything- that shouldn’t be a problem this year.

  22. Anyone know the specifics for NY?

    • @Mike,
      The specifics for NY are long and complex, but go something like this: The end user needs to pay the sales tax unless the final product is delivered out of state. You can claim tax exemption status on gear, if it is used in the production of a “Film.” Since there is no specific laws written for photography, it is my understanding that the film law applies. There are no sales taxes applied to shoots, except for HAIR AND MAKE UP. Yes, that’s right folks, your hair and make-up artists are supposed to collect tax from you for their services withing the city limits of NYC! As far as props and everything else I use for a shoot, I pay the sales tax at the store or have my sub-contractors do so and then I get a Exemption Certificate from the agency or magazine to cover myself just in case. One other thing, on all your invoices to an advertising agency or magazine, grant them a “License to Exhibit,” not a license to “Reproduce.” Finally, if you deliver a product in the state of NY digitally, via FTP, it is my understanding that it is not subject to sales tax.

      Disclaimer: I am not an attorney in the state of NY. When in doubt, seek the advice of an accountant and tax attorney.

  23. what if you billed for “consulting”?

    • @narayan, what Utah sent out says consulting is specifically excluded (as are sitting fees if no prints are purchased). However, it looks like anything that you bill for that results in a better print sold (make-up, travel, sitting fees, hourly fees, photoshop time, etc.) is taxed as part of the “total price” of the _product_. So you better be able to prove no image or product (physical or digital) changed hands to go this route.

  24. Completely off-topic but as an agnostic ex-Brooklyn Jew I find the casual slighting references to ‘funny underwear’ or other offhand religious slurs when talking about Utah really inappropriate and unprofessional.

  25. Finding this out at my local camera store the other day in SLC was really the last straw for me. I had sung Utah’s praises for years about how cheap it was and how it was a great place to live and work. I’d rather be raped by rent costs than the government. Unfortunately this is not a isolated event. Utah’s state government is a theocracy that punishes those who don’t agree with them. The state liquor stores are a perfect example, Mormons don’t approve of drinking but they are perfectly willing to make money off of it…. see you guys in NY….

    • @Michael Friberg,

      I don’t think Utah’s liquor laws have anything to do with the current discussion. Nor does your allegation that the state is a theocracy.

      I’m a practicing Mormon and the state intends on taxing me as much as anyone else, despite my ‘special underwear’. So much for ‘bleeding the beast’. Puhleeze people…please keep this on topic!

      Good luck in NY.

  26. This all sounds similar to North Carolina.

    This has been an issue in every state I’ve worked since I started back in 1980. I recall phoning the sale tax office in Boston in ’80 three times and got 3 different answers.

    As states search for ways to increase their revenue, I would expect many services to be taxed that currently aren’t.

  27. With #23
    Does anyone have any experience with this in New York?

  28. I have a lot of problems with states taxing photographers this way and other creative services but, why all the hate against the elected government? I think it was a Supreme Court justice who said “I like taxes. They buy me civilization.” or something like that…

    or as a former president said: “Taxes, after all, are the dues that we pay for the privileges of membership in an organized society”

    Not all taxes are fair. Work on educating others about the profession to make change.

    • @JC

      Thought the same thing today as I was driving back from the film lab while discussing the sales tax issue with a friend – I suddenly hit a bumpy section of road and caught myself thinking ‘jeez, why don’t they do something about this!?!?!’ before quickly realizing the irony.

      We really do enjoy an astonishing amount of infrastructure, security, and comfort, and it doesn’t come free. More than anything, I’d just like the tax code to be simple and consistent. That, and I’m not excited about back-paying taxes out-of-pocket because of a revised definition from the state…

  29. The inconsistency on this issue for state to state is interesting. In California, for example, a tangible piece of property such as a print of CD must be delivered in order for the job to be taxable. If you deliver a job electronically, via an ethernet cable, an e-mail or an FTP transfer then there is no sales tax due. One thing is sure. As governmental entities struggle to meet their commitments they will seek to collect tax revenue wherever they can find it. Re-interpretations of sales tax law to suit the states’ need for cash will not surprise me.

    • @john mcd.,

      “If you deliver a job electronically, via an ethernet cable, an e-mail or an FTP transfer then there is no sales tax due.”

      This is because cinemas showing films in CA and NY that were going to be beamed down from satelites to theaters did not want to be taxed. The law was written this way for the film industry.

      • @Greg Ceo,

        Yes, you are correct. And much of international copyright law has been written to suit the Disney Corporation.

        Hooray for Hollywood.

  30. I once licensed a stock image for an ad through an agency in Philadelphia. I live in Califonrina. Three years later I got a bill from the Philadelphia City Treasurer for unpaid City of Philadelphia Wage Tax. Apparently they audited the ad agency and sent these bills out hoping to collect some money. I wrote them a polite letter saying that I had not been in Philadelphia, that I had simply licensed a stock image and did not intend to pay the bill. I never heard from them again. I do know, thanks to a friend who played in the NFL, that whenever a professional sports team plays in Philadelphia the players have that same tax deducted from their paychecks and it is paid to Philadelphia before they even leave town. So I guess if you ever shoot in Philadelphia you are liable for the City’s income tax even if you you don’t live there. On the other hand, they have to find you.

  31. Looks pretty much like the law in Pennsylvania.

  32. Sounds pretty much the same as here in Georgia. I love the part where they get do doulbe dip the sales tax.

    (…..Sales tax must be collected on the total sales price of photography. The sales price includes any expenses of the photographer that went into producing the photography, even if they are stated separately on the customer’s invoice

    Taxable components may include:

    Sitting fees, hourly fees, creative fees, etc.Fees for models, props, stylists, wardrobe, makeup, equipment rental, etc.
    Travel expenses – lodging, meals, mileage, transportation, etc.
    Taxes or fees paid by the photographer…….)

    Thats right I pay the sales tax when I rent equipment, buy props, pay for my hotel, etc….
    Then I collect sales tax for the entire job(including expenses) from my client.

    Nice…..

    • @Toby,

      I don’t know the rules for Georgia (or Utah), but here in Tennessee, commercial photographers are considered “manufacturers”, and thus can apply for a Manufacturers Exemption Number.

      We just call it an “M number”. With this number, you are allowed to not pay sales tax on the cost of film and supplies that go into the production of jobs that are resold to clients. (In strict terms, you avoid paying sales tax on film that’s for a job, but you must pay tax on film bought for your vacation or family photos).

      Most photographers use this at Labs, and at their local Film Supply store. They just keep it on file there, and for all billable, “resellable” jobs, there is not sales tax charged by the Lab or the Film Store, to the photographer.

      Trust me, over the span of an entire year, it really adds up, and helps out. This also addresses the appearance of the “double dipping” factor, because tax is not charged multiple times on the same roll of film, (or CF card).

      Check into the laws of your own state, and see if you have access to this law. Also good, in general, to join ASMP, or APA, or even EP, to have access to good business advice.

      http://www.editorialphoto.com/

      http://www.asmp.org/

      http://www.apanational.com/

    • @Toby,

      Is there an official position taken by ASMP Georgia on what photographers need to collect sales tax on? I am new to the State of GA and did most of my work out of state until recently. I began shooting for a magazine here, read the blog and posts here and contacted the GA State Sales Tax Dept. They said they had to do some research and then after researching this basically stated that I must collect sales tax on assignments done within the state of GA for the entire amount invoiced UNLESS the images are delivered electronically. If I give them a disc or a hard drive, I MUST COLLECT SALES TAX on the entire shoot: props, hair and make-up, creative fees, everything; FTP Upload = NO SALES TAX. Of course, the magazines and accountants for the magazines said they had never heard of such a thing, even when I quoted directly from e mails from the State Tax Department. So I wanted to know if other photographers in the state of GA have had other experiences and how they deal with clients that think they don’t owe the tax and refuse to pay? Any thoughts?

  33. I think I just threw up a little in my mouth. This is the part of the business I hate, so I put it off and feel like I am gonna get hit by a truck here soon.
    Must keep better records
    Must keep better records
    Must keep better records!

    thanks for the insight.

    • @Tom McKenzie,
      That’s hilarious Tom. What isn’t funny is how serious the states are. I’d strongly urge you learn the tax laws in your state and follow them. I’m one of these Utah photographers getting audited and I can tell you that it is most unpleasant. Being able to have a glass of red while processing files, kissing the dog all hours of the day, and exercising NOT at 5 pm are our perks, but it kinda ends there. The taxes expected of us self employed folk are no joke.

  34. Found this passage rather strange:

    “A photographer may also render services such as developing, retouching, and tinting. ”
    ========================

    Tinting? Nope, never been asked to tint anything for commercial gain before. Maybe this is some new goldmine of profitability waiting to be discovered.

    Just off to register http://www.protinting.com – I smell $$$ ;)

  35. having been one of the test cases and first audited i can say first hand
    it is no fun. not much give or take. they went back 3 years on credit cards
    anything bought online that i did not have a reciept with sales tax paid on
    it, i was charged for.
    they want all sales in Utah taxed even if you have a tax resale #. i contacted some of my largest clients about this and when talking with their accountants found out the state had started auditing the companies that were buying photographic services, rather than fight it they payed the tax.
    always been a use tax as long as i have been working 25+ yrs .

    long story short i charge everybody tax except out of state. if i buy it online
    i pay sales tax every quarter to Utah for those purchases that did not have it.

    don’t have to like it just pay it
    could be worse i might have to be working for a living….
    and next time i will just use the money to buy a car

  36. Maybe it is time to seriously consider an incorporation in Delaware with everything – all purchases run through a Delaware office, all invoices to clients, every service billed through the Delaware office and you the owner are an employee of a Delaware corporation.

    There are companies in Delaware that set-up offices to handle the billing, delivery, everything. Hell with what you save on taxes you could afford to fly there every few months to collect your gear that you recently purchased and is owned by a Delaware corporation.

  37. Utah’s only enforcing old tax laws, laws they’ve had for many years.

    The revenue-raising opportunity for Utah (and for New York and California and Illinois and Georgia and Insert Your State’s Name Here) lies in enforcing *existing* laws. Some photographers are scofflaws when it comes to sales taxes and payroll taxes and labor laws, including workers’ comp and unemployment.

    It’s difficult to sympathize.

    • @Andre Friedmann,

      “It’s difficult to sympathize.”

      Will you feel the same way when you are under pressure from the state to pay taxes for something the state told you was not taxable?

      The problem here is the states offer (much like the Feds) conflicting advice, counsel and a set of rules that are unreadable or understandable.

      There is a southern state that says prints are taxable but polaroids are not, that portrait photographs shot in a studio are, but if they are delivered to a client they are not.

      Are you so sure they are enforcing laws they’ve had on the books for years? The very real possibility is that they are looking for new sources of revenue in this downturn and feel that the laws can be “adjusted” to their favor.

      • @Mother Mary,
        Allow me to predict my business’s future: not gonna happen. We obey the laws, and we’ve gotten more than a few written clarifications from our state’s sales tax people. Those written clarifications are a vital insurance.
        Allow me to describe my own state’s laws: possible to comprehend by anyone with genuine 12th grade reading skills, skills applied over the course of no more than a couple of hours during that first year of business.
        Allow me to comment about conflicting advice: happens all the time, whether in person or over the phone. It’s why we create *written* correspondence. We “get it in writing.”
        Allow me to comment about enforcement in my state: yup, no new laws, only more aggressive enforcement of existing tax laws.
        Allow me to comment about “the very real possibility”: Richard Hofstadter’s “The Paranoid Style in American Politics” is no basis for conducting business.

        Now allow me to comment about photographers’ business practices in the matter of sales tax: all over the map, with lots of violations. There’s nothing quite like hearing a photographer tell me what our state’s sales tax laws *should* be, and running his business on that basis, even though it’s contrary to sales tax law. And there’s nothing more common than a photographer attempting to “fly under the radar” as he neglects to register, neglects to file, neglects to remit. That’s the commonplace.

        • @Andre Friedmann,

          It does not matter if you obey the laws and have the written clarification.

          Virginia audited every photographer in the state. Even the ones that were doing it right by the books, were found to be doing it wrong, unless they appealed and were given an “clarification”.

          I wish you the best of luck and you do not need permission from anyone to state your opinions.

  38. Hey,
    If Utah is taxing photographers for the intangible, does that mean we can insure our digital files for the cost of its production and market value?
    I mean, if money/income can be taxed and insured (FDIC), items purchased or sold can be taxed and insured (Cars, cameras,paintings, etc etc) then doesn’t logic say that if my service/product as a photographer is taxable then it must be insurable.
    If so, do you think the insurance companies will be ever so happy to hear that I am adding all my images from 2008 onto my policy, they cost me close to 150,000 dollars to compile, and they sell on average for $350-2000. So, I hope I do not lose the 6000 images I have on my hard drive because of theft or fire or flood. If I am paying taxes on it I sure as hell want it protected.

    I would love some feedback on this? Any attorneys in the house?

  39. […] I saw a story over at A Photo Editor on the tax legislation that is aimed at the photographic profession.  It seems that even though photography is a service, they feel that you are still selling a product for which they are due taxes.  This includes the licensing of photographs.  Like it’s not hard enough already to make a decent buck with your camera.  To see the state tax FAQ, check out the full article at A Photo Editor. […]

  40. The reason for this tax is because Utah is having $$ issues and they want to collect more tax…. I guess being so religious of a state finally backfired on them….

    Now you can go to a bar without being a member and drink more the state gets more tax, before you needed to pay a membership fee at every bar/club so visitors wouldnt visit many places.

    So photogs. get screwed by getting taxed as well.

    • @Al, nah have you noticed that in utah unless you are a major corporation or chain you got a snow balls chance in hell of surviving there… not just photographers… everyone. which pisses me off when i’m trying to find a good restaurant to eat at

  41. It recalls the short-lived tax on photographs imposed near the end of the Civil War (April 1, 1865 to July 31, 1866). This tax infuriated photographers because it required them to affix revenue adhesive stamps to each photograph, dramatically reducing their productivity as well as increasing their overhead.

    A sample carte de visite (CDV) from the studio of prominent Cleveland portrait photographer Edgar Decker with attached revenue stamp on the back can be seen at http://www.flickr.com/photos/cunningba/3348416476/

  42. The ‘United’ States – who ever come up with that name for a country made up of States who have different rules for just about everything was a bit of a numpty.

  43. Whether we like it or not, the bottom line is that we need to fill this form out at this time.

    However, I strongly believe that we need to form a lobby for photographers. I don’t believe that there is one and that makes us very vulnerable against the policy makers.

    I will have to blog about this and find support from fellow photographers in order to fight this.

    Please feel free to contact me, if you can contribute in any ways to fight back on this issue.

  44. […] What are the Risks of Claiming a Loss on Your Return? This is the biggest issue to consider. Filing Schedule C, and especially using expenses or a net loss to offset your ordinary income is something that frequently triggers an audit of your tax return by the IRS. You simply should expect to get a letter from the IRS or from your state asking you to provide documentation and evidence for the positions taken on your tax return. With budget deficit projected to reach the level of $10 trillion, we’re expecting that the tax audits of individual returns will increase considerably in the coming years, since someone has to pay for it all. In addition, some returns get selected for audits at random, and it is always a good idea to have your tax files in good condition before you actually file the return. For example, good luck to you if you’re a photographer trying to make a living in Utah. […]

  45. Just adding my story:

    I am one of the many UT photographers who recently received this self-audit and I did submit my sales and use tax return with no sales tax collected. The bulk of my work is editorial for local magazines with all images delivered via FTP – likewise for the few portrait sessions I shot last year those images were also delivered electronically.

    On 28 Jan 2009 I attended a Utah Sales and Use Tax Workshop held at the Tax Commission in Salt Lake City and hosted by a Sales/Use Tax Trainer a Collection/Compliance Specialist. In that class I specifically asked about my type of photography and I was told without doubt that as photography was a service those portions of my sales were certainly not taxable. The UT Tax representatives were both unclear about the sales of my images as I don’t sell prints rather I deliver the images to clients solely via FTP electronic transfer and thus may not have been considered tangible goods. After some investigation I was later told that based on the description of my business I did not need to collect any tax on my sales. Further, they did advise that should I sell prints in the future that I should be sure to itemise my invoices as such, as sales tax would only need to be collected on the print sales portion of the sale; If I invoiced as a single item and prints were involved then I would need to collect sales tax on the whole sale.

    – mike
    Calanan Photography, LCC
    SLC, UT

    • @calanan, …just wondering how you can get away with not charging sales tax when the Utah Tax Commission clearly states that photos sold for use in magazines are taxable…and that tangible personal property includes anything that can be “seen, measured, felt or touched.” I do virtual tours, and all jobs are posted to the internet…yet I charge (and pay) sales tax on every tour based on the Tax Commission’s published guidelines. I will soon be doing virtual tours in Colorado…and have been told by the involved local jurisdictions that I do NOT need to collect sales tax on any virtual tour sales that are simply posted online…but do need to charge sales tax if I provide a CD to the client. They have a different definition of “tangible.” I think this self-audit sucks too…Utah is, in fact, sticking it to their photographers. It seems that the state wants us to collect tax on every single aspect of our business…yet gives seemingly unfair tax breaks to the video industry. Does that mean I can get a refund on the sales tax I paid on a couple of 5D Mark II cameras earlier this year if I claim that they are primarily used to produce videos? Could a virtual tour be construed as a “motion picture”? After all, it is a picture that moves. There are too many ambiquities here and a better approach would have been to clarify photographers’ tax liabilities before “sticking it to us” and making it retroactive for 3 years.

      • @frank, just clarify I’m certainly not getting away with not collecting sales tax. When I started the business in mid-2008 I asked both state agencies and other UT photographers about what sales tax I would need to collect given my business model and was told none. In late-2008 I heard rumors of a possible sales tax crackdown so I signed up for the next available state course on sales tax, which was in Jan 2009. Again, in that class I was reassured I needed to collect no sales tax so I later filed $0 for my 2008 sales tax. Receiving this audit and being told that I needed to collect retroactively stings, not only because I had been advised otherwise but now I have to pay that sales tax out my own pocket. Live and learn I suppose.

  46. You should fight the retroactive part. It’s unconstitutional. If people just lie down and take it, they will continue to dish bs like this out until everyone is either dead or living in dumpsters.

  47. This is by far the most corrupt state I’ve ever lived in! From the very bottom to the highest levels, I have NEVER observed anything like this garbage. I’m already looking for other locations to move to. Over-taxation, corruption, control; if you’re not aware, residents of Utah cannot even go online and purchase from the Internet wines and even adult magazines and have them mailed to this state. This IS a photographers nightmare….so beautiful…so dark and wicked.

  48. Finding accurate information on my state’s (VA) Sales and Use Tax is like working a second full-time job. I swear, they make it convoluted and confusing JUST to trip people up.


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