What’s up with Wedding Photographers and Sales Tax?

Warning: I am not a tax expert! Consult your tax professional before you listen to me
All of my research is in regards to California Sales Tax and photography specifically.

Now that you can’t sue us, here is me, Austin trying to define the mysterious relationship between Wedding Photography and California Sales Tax.

The Big Deal:
Sales Tax on groceries is no big deal, but when you’re talking about 8%+ Sales Tax on $5,000+ the game changes, big time.  Whether you’re looking to hire a photographer or hire yourself out as one, I hope my research helps you out

The Confusion:
Is photography subject to Sales Tax even though it is a service?

I know photographers who charge Sales Tax on all goods and services they offer – just to be safe. On the other hand, I know photographers who only charge Sales Tax on the actual cost of the goods they sell. Assuming they all have CPAs, have a good work ethic, and live in the same state – What the heck is going on?

My Research:
I went ahead and looked it up for myself on the official gov site: Tax Tips for Photographers and then called Kent, a California Sales Tax expert to discuss it further.  What follows is my interpretation (not anyone else’s), so like I say – look into it yourself.

Is Wedding Photography subject to CA Sales Tax?
The short answer is yes and no. Haha, yes – you MUST ready on!

There is no debate on physical goods.  For example, all albums, wedding books, printed photos, and DVDs/CDs are subject to Sales Tax.

Now, when it comes to Sales Tax on services, it gets a little tricky. Generally, services are not subject to Sales Tax.  This makes sense since that labor is already being taxed through Income Tax.  But in California, “Any labor and services involved in producing or fabricating the photograph” (Pg.1) is subject to Sales Tax. “However, if you transfer a photograph electronically and do not include any physical product in your sale, tax does not apply.” (Pg.7)

WAIT, WHAT!?
Yes, this is crazy: Unless the photographer and the client have agreed to transfer all images digitally, the entire sale is subject to Sales Tax.  The entire sale includes the cost of the photographer’s time to photograph and edit the photos.

The Startling Truth
If you are a photographer in California and you plan on delivering an actual product, your time is subject to both Sales Tax and Income Tax.

“But isn’t sales tax good?”
“But Austin,” you may say, “sales taxes are good for the community! They go to good causes like repairing roads, and paying public school teachers.” Okay, this is a good point, but do you pay sales tax on anyone’s labor? The answer is no, and the reason is because they pay tax on their income already. You only pay tax on actual goods. That is, unless you live in a state like California.

Bonus Question Time:
How should Wedding Photographers in California charge for Sales Tax?

Solution #1
Bite the bullet, twice: Some photographers include the sales tax into their sticker price. Unless you’re an x-European taxpayer, or don’t mind “raising” your prices, this does not sound right.

Solution #2
Too bad for the client: “The price we quoted you did not include tax, I’m sorry. Didn’t you see the fine print?” Ouch.

Solution #3
Jump through the loophole: No Sales Tax on the services as all photos will be delivered digitally.  Albums can be ordered a la carte later and will require Sales Tax independently.  The sucky part? No packages, sorry!

Conclusion:

If you’re hiring a photographer: make sure you ask about Sales Tax and prepare for it.

If you are a photographer in California, read this thoroughly, hire a CPA, a literary scholar, and possibly an interpreter.

If you are a photographer outside of CA, do your research!

Again, ignore everything I just said and consult your neighborhood Tax Attorney and/or Accountant.

Much love,

Austin