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Old Dec-01-2005, 03:10 AM
#1
StevenV is offline StevenV OP
Wake Up & Smell the Music
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Sales Tax included?
looking at the confirmation email that's sent when an order's placed, it appears that sales tax is not being collected:

Item Subtotal: $3.96 USD
Shipping & Handling: $1.75 USD
Taxes: $0.00 USD

Total: $5.71 USD


should it be?

I think the rule is that sales tax should be collected if the seller has a presence in the state in which the buyer resides, but who's the "seller" here - me, SmugMug or EZPrints? I know what the credit card company things (SM) but what's the government think, I wonder.
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Old Dec-01-2005, 03:23 AM
#2
Andy is offline Andy
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Quote:
Originally Posted by StevenV
looking at the confirmation email that's sent when an order's placed, it appears that sales tax is not being collected:

Item Subtotal: $3.96 USD
Shipping & Handling: $1.75 USD
Taxes: $0.00 USD

Total: $5.71 USD


should it be?

I think the rule is that sales tax should be collected if the seller has a presence in the state in which the buyer resides, but who's the "seller" here - me, SmugMug or EZPrints? I know what the credit card company things (SM) but what's the government think, I wonder.
Hi Steven,

Because it is an online sale that technically takes place in California, we charge sales taxes on any California purchase.
It is up to the customer to declare taxes themselves according to their own state regulations. Sales taxes on Internet purchases are only required to be charged by the seller on purchases in states where the seller has a physical presence. Since we collect the credit card information, we are considered to be the seller.

Even though you are in Georgia, no sales tax is due from you.

I hope this helps!

All the best,
Old Dec-04-2005, 02:53 PM
#3
Bodley is offline Bodley
Full Contact
Bodley's Avatar
Quote:
Originally Posted by Andy
Hi Steven,

Because it is an online sale that technically takes place in California, we charge sales taxes on any California purchase.
It is up to the customer to declare taxes themselves according to their own state regulations. Sales taxes on Internet purchases are only required to be charged by the seller on purchases in states where the seller has a physical presence. Since we collect the credit card information, we are considered to be the seller.

Even though you are in Georgia, no sales tax is due from you.

I hope this helps!

All the best,
In Alabama taxes are required (according to the sales tax department). I collect both State and local taxes on Smugmug sales. My online prices include the taxes. Each month I back the taxes out and send the State and Local entities their taxes.
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Old Jun-28-2007, 10:25 AM
#4
Legacy is offline Legacy
Major grins
Legacy's Avatar
Quote:
Originally Posted by Bodley
In Alabama taxes are required (according to the sales tax department). I collect both State and local taxes on Smugmug sales. My online prices include the taxes. Each month I back the taxes out and send the State and Local entities their taxes.
I am from KY and my Dept. of Revenue said I cannot "absorb" the sales tax into my print price...even if I am paying the state the 6% sales tax required...if & WHEN they audit me...they will say I didn't charge 6% of my total bill...and make me pay up, even if I have been paying in. I am just starting a business & they (dept of rev.) are trying to figure out if I should or shouldn't pay sales tax on SmugMugs sales. I know Andy has said it a dozen times...NO...because SM is a California based comp. & therefore SM only collects sales tax from Californians & that it isn't necc. for those outside of CA to pay sales tax because we are not selling the photos...SmugMug is. Now we ARE required to pay in on our income from our SmugMug sales. This is called "Interstate Commerce", I believe. Right now I am working on an e-mail to send to a lady at my states Dept of Rev. so she can look into it further. Several links to the posts from this forum are included. I called them looking into it & they are acting like I am trying to cheat the system....I CALLED THEM! Grrr...there is always something. I just want to make sure everything is kosher! You know what I mean?
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Old Jun-28-2007, 11:31 AM
#5
dragon300zx is offline dragon300zx
What God Complex?
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Bodley I don't know about Alabama but sounds to me like they think you are the seller and don't know how this whole thing works (in other words you are getting screwed most likely).

You are not the seller of orders that are placed from a smugmug powered website. Smugmug is the seller and they are a California company. The business model is basically that of a gallery (or consignment shop). You wholesale or provide your art pieces to a gallery and because they are reselling it you don't charge them sales tax. When they make a sale they charge sales tax when applicable on the total cost of the sale. At that point they cut you your commission which you claim as income, then they keep their share and the sales tax.

When it comes to sales off of a smugmug site YOU ARE NOT DOING THE SELLING. You are simply the artist of the piece; smugmug is the company/gallery that is selling the final piece of art. After all you are not getting paid the full amount of the sale. You are only getting a percentage, smug makes money off the sales too.

If your state department has questions about this its because they are not clear of the business model that is being used when you are having items sold on smugmug. If you explain it to them as Smugmug is your art gallery and they are selling your stuff and you are not doing the sales, they should get it.

Now if you order the prints yourself, and then sell them to your customers AND YOU ARE THE ONE TAKING PAYMENT DIRECTLY then you are required to collect sales tax.

IF YOU COLLECT THE MONEY YOU ARE THE SELLER/RETAILER.
IF SOMEONE ELSE COLLECTS THE MONEY YOU ARE EITHER A WHOLESALER (NOT SUBJECT TO SALES TAX) or whatever else they want to consider you BUT YOU ARE NOT THE SELLER/RETAILER.
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Old Jun-28-2007, 03:47 PM
#6
Angelo is offline Angelo
Turning frowns upsidedown
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wow, guys. way to revive an 18 month old thread!!!

Not sure why this is so difficult to understand and why our dear smuggies do things to hurt themselves financially.

if you are on smugmug and smugmug is selling your photos for you there is no reason (heck there isn't even a way) for you (the photog) to collect sales tax from anyone, for any reason.

people are NOT buying photos from you, they are buying from SM, they are SM customers.

if you're sending money to your respective state of residence you're wasting money or you've improperly established your business license.
Old Jul-17-2007, 02:17 PM
#7
Legacy is offline Legacy
Major grins
Legacy's Avatar
Quote:
Originally Posted by Angelo
wow, guys. way to revive an 18 month old thread!!!

Not sure why this is so difficult to understand and why our dear smuggies do things to hurt themselves financially.

if you are on smugmug and smugmug is selling your photos for you there is no reason (heck there isn't even a way) for you (the photog) to collect sales tax from anyone, for any reason.

people are NOT buying photos from you, they are buying from SM, they are SM customers.

if you're sending money to your respective state of residence you're wasting money or you've improperly established your business license.
I have to pay sales tax anyway on my session fees & such...so I was setting that up when they asked & wouldn't get off of my tail. They have "determined" that I do need to pay sales tax. So - now I need to talk to a CPA or something & have them straighten it all out for me. Super frustrating. I know I dont' need to pay...but getting them to understand is a whole different situation! Thanks!
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Legacy Photography
Old Jul-17-2007, 03:14 PM
#8
Angelo is offline Angelo
Turning frowns upsidedown
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Quote:
Originally Posted by Legacy
I have to pay sales tax anyway on my session fees & such...so I was setting that up when they asked & wouldn't get off of my tail. They have "determined" that I do need to pay sales tax. So - now I need to talk to a CPA or something & have them straighten it all out for me. Super frustrating. I know I dont' need to pay...but getting them to understand is a whole different situation! Thanks!
Well I certainly hope what you mean is: "You are required to collect sales tax from your client".

I understand some jurisdictions make services, like photography, a taxable commodity. (quite unfortunate really and you should carefully research this issue to ensure this is proper and legal in your state. just because the taxing authority says so doesn't mean they aren't wrong). So you should be collecting the proper amount of tax, added to your client's service invoice as dictated by law.

But you still are not engaged in the business of selling prints so there is no justifiable way your state can dictate the collection of sales tax. Seems to me you need only refer them to the onsite seller, in this case SmugMug, to prove there is another legal entity engaged in print sales other than you and that they are following commerce laws relative to sales tax where appropriate.

Your tax authority probably just can't understand how you could "take" photographs without providing prints. You should invite them to join the 21st century.
Old Jul-19-2007, 10:33 PM
#9
ChatKat is offline ChatKat
flash frozen photographer
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Some locales require sales tax and some don't!
Some states require that you charge sales tax for services when a product is involved. If you have a SM Pro account, then you have electronically given the file to SM. No tax should be due because you have not delivered a TANGIBLE product. You've have only delivered eletronic data - that is not TANGIBLE nor taxable for sales tax purposes.

California requires that you charge sales tax on the photo and the labor if you charge for labor ( a sitting fee comes to mind)if you deliver prints. Sales tax gets charged on the full amount if you deliver a product as a result of the service. But if SM is sending the prints, you digitally upload to SM, then SM is the seller - they charge tax on the end sale - prints only. If you give your client a CD of the images - you have given a tangible product. Whole job is taxable! If you send them an email with photos as attachments it is an electronic transfer and you have not given a tangible (tangible means you can hold or touch the product) product.

Since SM is the actual seller then in California, there would be sales tax if YOU, the photographer delivered prints. But if you electronically send the file and you are not selling a print - no sales tax for photo services.

I hope this is clear - (I prepare California Sales Tax Returns to pay for camera gear - I am a Tax Preparer in California)

Last edited by ChatKat; Jul-20-2007 at 04:41 PM.
Old Jul-20-2007, 05:58 AM
#10
sirsloop is offline sirsloop
TMP
SM is great! Take photos, upload them, market, and simply submit the 1099-MISC at the end of the year. Don't forget to deduct all your expenses from the year too! ;) Sales tax? Heck no!
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Old Jul-20-2007, 10:35 AM
#11
NavyMoose is offline NavyMoose
See me, see my Nikon.
Sales tax question redux
Is there a document on SmugMug letter head we can download stating what has been said in this thread so I can show it to my accountant and to the *lovely* folks at the Massachusetts Department of Revenue?

Thanks for this info!!

Navy Moose

Quote:
Originally Posted by Andy
Hi Steven,

Because it is an online sale that technically takes place in California, we charge sales taxes on any California purchase.
It is up to the customer to declare taxes themselves according to their own state regulations. Sales taxes on Internet purchases are only required to be charged by the seller on purchases in states where the seller has a physical presence. Since we collect the credit card information, we are considered to be the seller.

Even though you are in Georgia, no sales tax is due from you.

I hope this helps!

All the best,
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Old Jul-31-2007, 12:05 PM
#12
NavyMoose is offline NavyMoose
See me, see my Nikon.
Massachusetts and Sales Tax
Hello fellow SmugMuggers!

I am a new Pro user living in Massachusetts. I was wondering if anyone here knows if the DOR (Department of Revenue) requires professional photographers to pay sales tax on sales through SmugMug.

My gut says no, because it is Internet based and we don't know where our customers reside. On the individual tax return, line item 33, was asking about purchases made out of state. I believe they are trying to collect tax on purchases made online and in NH. I'm hesistant to call the DOR because I don't want to give them the idea to try to tax Internet sales.

Thank you all.

Navy Moose
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Photography, as a powerful medium of expression and communications, offers an infinite variety of perception, interpretation and execution.--
Ansel Adams
Old Jul-31-2007, 07:05 PM
#13
StevenV is offline StevenV OP
Wake Up & Smell the Music
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see http://dgrin.com/showthread.php?t=23400
since the company that sells the prints for you is a)not based in your state and, more importantly b)takes care of collecting and paying state tax where they do business, you don't have to. Tell your tax officials that you don't sell prints, someone else sells prints for you (the consignment shop metaphor seems to work, though since there's a mismatch in some people's minds between digital images and physical prints, not everyone gets it).
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my words, my "pro"pictures, my "fun" pictures, my videos.

Old Jul-31-2007, 07:54 PM
#14
mattmcc is offline mattmcc
Memories By McCarthy
Quote:
Originally Posted by Angelo
wow, guys. way to revive an 18 month old thread!!!

Not sure why this is so difficult to understand and why our dear smuggies do things to hurt themselves financially.

if you are on smugmug and smugmug is selling your photos for you there is no reason (heck there isn't even a way) for you (the photog) to collect sales tax from anyone, for any reason.

people are NOT buying photos from you, they are buying from SM, they are SM customers.

if you're sending money to your respective state of residence you're wasting money or you've improperly established your business license.
It's difficult to understand, because some states like mine (Texas) have the exact process by which smugmug works listed as a situation where we (the photographers) ARE required to collect sales tax.

And from there, even if we are in the clear for sales tax on prints, the issue regarding sales tax on sitting fees when all you're doing is uploading pictures to a gallery is clear as mud. Very technically according to Texas tax code at least, Smugmug would be responsible for collecting sales tax on our sitting fees as all the tax for anything that went into producing the finished print is due at once. It's a pretzel, for sure. One that likely won't be unraveled until someone is audited, fights back, and actually wins.

Matt
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