How do you collect sales tax and tax for print credit?

mrhonimrhoni Registered Users Posts: 173 Major grins
edited January 27, 2013 in Mind Your Own Business
Please let me know how you handle this as maybe I'm going about it incorrectly. I haven't charged people yet, but am in process of getting everything setup.

My understanding on California tax, the session fee must be taxed if any photos are printed but if all photos are downloaded then there is no sales tax on the session fee.

On their own, downloads are not taxed and prints are taxed.

Currently, for example, if I charge a session fee of $500 and provide a print credit coupon of $100, I was going to charge sales tax on the $500 session. If the client only purchased downloads and had not purchased any prints, then I would refund them the sales tax I had collected on the session. If the client purchased any prints, then there is no refund on the sales tax charged on the session and Smugmug would charge and collect the sales tax on the prints.

However, since I have a print credit of $100, Smugmug won't charge sales tax on any prints ordered up to the $100 print credit, so that indicates that I need to charge sales tax up front on the Print Credit as well as the session and then refund if all purchases (or photos via the Print Credit) were downloads.

I expect that almost every time, photo prints will be ordered, but I wanted to be prepared to handle this situation if the client only wants downloads.
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