It's not that easy to find out everything you need to know about running a photography business in a short period of time - sometimes it seems the information never stops pouring in and the way our mind picks out useful things from this generous inflow of bytes is a big mystery.
Here's a link to an article that goes over NJ sales tax as it applies to photographers specifically.
I remember asking my accountant whether or not I should be collecting sales tax or not, and was advised that we don't collect sales tax on services (meaning ANY services). As long as I'm not selling any products, pictures, frames that is. Which I wasn't.
In the following article it says specifically that:
- any equipment that photographer purchases, rents, leases as well as replacement parts with useful life of more than 1 year are sales tax exempt (use form ST-4).
- all other replacement parts and supplies are subject to sales tax.
- sales of photographs for any type of use except advertising are subject to tax.
- sales of photographs for use in advertising is tax exempt and photographer must obtain a form ST-4 from a client.
- sales of a digital photograph, where it is delivered solely by digital means (e-mail, uploads, etc.) is tax exempt.
- all retouching/post-production services are subject to sales tax
- hours worked, travel expenses, everything that computes into a total - is subject to sales tax.
After reading this I was still left with a lot of question marks. Since most of the article seems to be related to film and print photographers - the definition was even more vague to me. So I called the NJ Divistion of Taxation and asked them for a straightforward answer as it would relate to services rendered by a "commercial" photographer like me:
- I don't shoot film and don't do prints. All my services produce digital files which are intangible property, except for situations when I provide the client with a CD. Do I charge tax for those?
- CD's are taxable.
- if I shoot a portrait session, wedding, anything else that's not going to be used for an advertisement?
- charge tax for the services.
- if I shoot business headshot/product/fashion for the website/promos/ads?
- then don't charge tax for the services.
Also they said that yes, all my post-production efforts should be taxable, except for the cases when it's done for advertising... or so I understood.
At the end of the day I still feel that I haven't figured it all out and that I'd like to get all my answers from them in writing, because the article leaves a lot to the imagination.... unless it's written by a programmer, then it all makes sense, but how would we know? :)
Why it all still seems vague to me? Because the 1st thing that person on the help line told me was - I must collect sales tax for ALL PHOTOGRAPHY SERVICES. Only after hearing me out and reading through the article with me they started offering more detailed insights. And it turns out that "no" - most of MY (specifically) services are not taxable. I rarely do private portraits...
Not to fret, just in case - I've come up with the following decision. If after my judgment that work is "advertising" I collect an ST-4 form from the client who's doing this work for promo/advertisement - they won't pay tax. If they don't give me the form - I'll collect tax. Simple as that.
Time to go and file those sales taxes by the way. It's quarterly and mine is due Oct-20!
The article is here:
http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/anj2.pdf
The phone number for Division's customer service: 609-292-6400
Honestly, I don't think most of the people who work there KNOW what the law is- it's completely vague. Services are tax-exempt but retouching- which is a service- is taxable? Many years ago a creative agency was audited and as a result spent three years writing a manual for creatives with the tax commission. I had a copy at one time, but I "loaned" it to my accountant and haven't seen it since.
ReplyDeleteYou are right Lynne... very confusing :). Soothes me though when I speak to one or two of them, at least they're confident when giving me the answers..
ReplyDeleteAny chance you could get a hold of that manual somehow?...... We could present the info to fellow creatives if that would be ok with you