Pros and Cons of Charging Sales tax? Do you do it?

skSeattle

Hello All,
I live in Seattle, Washington. My head is spinning from the maze of information provided by the city and state on sales tax.

I may be wrong but it looks like I only have to charge taxes (9.5%) for photo sales if I'm selling to someone who lives in my state.

Do you charge sales tax? Why?
If you don't charge sales tax and it's about personal preference, why not?

Thanks,
Shawn

MomaZunk

In Texas, it is the law. I have heard Washington was pretty strict as well.
You are only required to collect sales tax as an agent of the state that you live in.
If someone purchases a taxable item out of state, it is the purchaser's responsibility to pay the applicable sales tax to their state.
In Texas, the ONLY thing that would be non-taxable is a session fee without a delivered product. If an image is delivered in anyway, the session fee becomes part of the manufactured product, which is taxable.
I put cancellation fees in the non-taxable category, but everything else is taxable.
You can collect sales tax through Smugmug, and they only apply the rate for "in state" sales. There is a place for only one tax rate, so I put the total county+state rate. In theory, if someone purchased outside of Harris county but within Texas, the tax rate would be closer to the state 6.5% versus the 8.25% in Harris county.

I file and pay my sales tax quarterly online.

SamirD

Taxes can be very, very complicated. Some states like here in Alabama have differing state, county, and city taxes. So you have to figure out all the rates and charge accordingly. Complicate that with the fact that Smugmug is actually the one doing business with the client, and SM actually has to remit the tax. But this also varies state-to-state.

This is where the federal government is supposed to be helping "...regulate interstate commerce, provide for the common defense..." rings in my mind from high school government/civics classes. Yet another thing broken in our downward spiraling country. :cry

skSeattle

Thank you all for the RE: Your info helps.

I should also speak to a tax rep here in Seattle when I can afford the "there's one for you, nineteen for me. TAXMAAAAAAN!"

SimirD, spiraling country? You mean, our gov. making sick and dying people fight for basic needs, acting like a schoolyard bully, and giving huge tax breaks to companies that sell us substandard junk are not good things?

Art Scott

Personally...there are no PROs to charging sales tax.....but taxes are a needed evil to keep the country,state, county and cities running...........simply put...I charge and pay taxes because it is the law.....

ziggy53

MomaZunk wrote: »

... In Texas, the ONLY thing that would be non-taxable is a session fee without a delivered product. If an image is delivered in anyway, the session fee becomes part of the manufactured product, which is taxable.
...

As I understand it, service industries (consulting, software programming and even photography) may not have to charge for a singular, unique tangible. This might include a single disk of images that are unique to an individual customer and project (an inconsequential exchange of tangible personal property, of little value to most other people). A wedding or event would probably qualify for a disk to represent your services that might be non-taxable. You would not charge for the disk, just for the service.

As usual, check with a local accountant or tax attorney to be sure of your situation. States with taxable services would certainly not qualify.

TxTortoise

Sales Tax - Texas

MomaZunk wrote: »

In Texas, it is the law.

As Dee said, there's no flying under the radar anymore in Texas... ;-(

http://www.window.state.tx.us/taxinfo/taxpubs/tx94_176.pdf

With online filing and separate withholding from SmugMug it's not too onerous for SmugMug sales.

Dreamspinner

As I understand it, service industries (consulting, software programming and even photography) may not have to charge for a singular, unique tangible. This might include a single disk of images that are unique to an individual customer and project (an inconsequential exchange of tangible personal property, of little value to most other people). A wedding or event would probably qualify for a disk to represent your services that might be non-taxable. You would not charge for the disk, just for the service.

That's totally wrong for California and I know some other states are similar. Here if you produce a tangible product even Disk or flash drive you have to tax the client for everything they paid you including the photo shoot etc. If they download the images over the interwebthing then no tax is due at all. If you're in business and not paying sales tax to your state you could be in for some hefty fines. I'm not sayin' it's right just the way the world is. :cry

SamirD

skSeattle wrote: »

You mean, our gov. making sick and dying people fight for basic needs, acting like a schoolyard bully, and giving huge tax breaks to companies that sell us substandard junk are not good things?

There's all sorts of bad things going on right now. I wouldn't care except that we're doing some of the same things I've seen in third-world nations that are full of corruption.

And these stupid things have cost me A LOT as federal laws have not been enforced, and I've had to make up the difference for it.

skSeattle

I'm charging taxes. Lots of good info from everyone. Thank you.

G-Force

MomaZunk wrote: »

You can collect sales tax through Smugmug, and they only apply the rate for "in state" sales. There is a place for only one tax rate, so I put the total county+state rate. In theory, if someone purchased outside of Harris county but within Texas, the tax rate would be closer to the state 6.5% versus the 8.25% in Harris county.

I file and pay my sales tax quarterly online.

How do you handle the fact that each county has a different tax rate? In Florida, you are supposed to charge the tax rate of the county which you made the sale which is not necessarily the same as where I live. Florida county surtaxes range from 0-1.5% which is to be added to the base rate of 6%. Since you can only put one tax rate in smugmug, I'm wondering whether to just put in the maximum possible tax that would be required 6% + 1.5% or just use an average.

MomaZunk

Yes G-Force, that is what I do.
Harris county in Texas is the highest that I know of for this state, so that is the one that I use.
Not to mention it is where a majority of my sales are.

SamirD

G-Force wrote: »

In Florida, you are supposed to charge the tax rate of the county which you made the sale which is not necessarily the same as where I live. Florida county surtaxes range from 0-1.5% which is to be added to the base rate of 6%. Since you can only put one tax rate in smugmug, I'm wondering whether to just put in the maximum possible tax that would be required 6% + 1.5% or just use an average.

And this can be an issue in a tax audit. Consult your tax attorney and talk to the Florida state auditor for their advice.