What's taxable when it comes to photography?

There was an link on Sales Tax News and Links today that brought up this topic.  I actually wrote about this originally on July 16, 2009.  Amazingly, the article needed little updating.  But I have changed a few things and applied a little wordsmithing.  So for you professional or semi-professional photographers out there, enjoy.

Photography services

Most states don't broadly tax services - but some do. And photography is also considered the delivery of product (the prints), and that product is usually taxable as the sale of tangible personal property. However, these rules vary enormously from state to state.  So you need to research what YOUR state does.

For example, I'm in Illinois, and photography services aren't taxable. Even the delivery of the prints, if they're part of the photographer's service, like doing a wedding or a portrait session, are still not taxable.

However, in Wisconsin (a popular vacation destination for people from Illinois in case you've never seen Stripes), most photographic services, including shooting those portraits and weddings, are taxable. I bet that just bummed out a bunch of photographers I know in Wisconsin.

Film or print processing

Getting prints from the drug store is taxable in most states. It's the delivery of tangible personal property. And if you order prints online and they're delivered to you, you'll owe use tax if they don't charge tax.

Sale of prints

Just like the sale of any other tangible personal property, sales of photographic prints (eg. at an art show) are taxable.

Delivery of images online

In a few states, the delivery of pictures electronically is taxable. But while many states tax downloaded video, music and books, most states just haven't gotten around to photographs yet.  But that will change over time. And the auditor might try to bluff you, just for grins.

And if you deliver the photographs on a flash drive or a DVD, then you've transferred tangible personal property, and the sale is no longer simply a transfer over the internet but a true sale of TPP.

Special tax breaks

There are a few states that have special exemptions for the sale of art - and this usually includes fine art photography.  Don't get excited though.  Only a few states do this.

Here's the cool part

If you're selling your taxable prints, then the paper and ink that you purchase is usually exempt as purchases for resale (or ingredients if you're thinking manufacturing).  Heck, the inkjet printer might even be exempt as manufacturing equipment.

Please remember that, as you saw with Illinois and Wisconsin, the rules vary widely from state to state.  You gotta look it up for your state.  Because it's going to be different there.

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The Sales Tax Guy http://salestaxguy.blogspot.com

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Sneaky Information Services Gambit

Here's a sneaky auditor trick that I've recently heard about. It's probably not legal; it certainly doesn't make any sense to me. So at least be suspicious of the auditor who pulls this one out of their hat.

In most states, information services aren't taxable. Information services are essentially the sale of third party information. In the olden days, these were delivered in hard copy. Which means tangible personal property.

But these days, the information is usually delivered by electronic means, usually by downloading. These include things like tax databases, stock photography, wire services, credit reports, mailing lists, etc. It's not so much an information service as the sale of intangible property. Note sales of intangible information aren't generally taxable.

However, all bets are off if we're talking about the actual delivery of tangible personal property. A convenient example would be a mailing list sent to you that has already been printed on self-adhesive labels. You are buying tangible personal property. It's not intangible. It's probably going to be taxable.

If you had merely downloaded the list though, in most states it's not taxable. It's not tangible. The sale is gonna be considered the sale of an information service.

In the last year, I've heard reports of sneaky auditors who will argue that, "Yeah, when you bought the information, it wasn't taxable. But then you printed the labels, and that made the information tangible and therefore you owe me use tax."

Which, to me, makes no sense. I can see their point. They'd like to get the tax that you've neatly dodged by downloading it as opposed to ordering it printed. But since the transaction was non-taxable, I don't see how they can make it taxable by a later event like this. You've essentially changed its form on your own. And you probably did pay tax on the CD, labels or paper you used. Using this logic, taking any information you've downloaded, and didn't have to pay tax on, would become taxable merely by printing out a backup copy.

So if you're downloading information and then printing it later, whether it be photographs, mailing lists, credit reports, music you burn onto a CD, , etc., be prepared for this gambit by the auditor. I'm fairly sure they're bluffing, but be prepared to call that sales and use tax expert I keep talking about.


Sales Tax Guy
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