Can someone tell me what the qualifiers are or where online I can figure it out? Services vs. Products confuses me a little bit. Thanks ya'll!

I have the same question. I just talked to a tax person who said that if I give a CD/DVD, it becomes a taxable service because it is a tangible item. Can anyone confirm this? She said that if I could electronically transfer the files from PC to PC it would not be taxable. That is kind of weird. I consider my disk of images as a free gift as part of my services. So should I just say my disk of images cost $0.01 and then be done with it? How do others handle this in Florida?

the best thing to do is ask the state.

they are very helpful and will answer you online so you can print out their reply. that way you have a document to refernce incase anyone questions you.

Does anyone know the link then? I doubt emailing Florida @gmail.com will work

But the state's best interest is to reply with "It is all taxable." And technically I paid sales tax on the CD/DVD already at Staples so does that mean I already paid sales tax on it if I say there is no additional value and it is a gift.

http://www.myflorida.com/dor

Damon,

How do you guys handle this?

From what I am hearing if I sell Package A which includes 2 hours of my time, online image hosting, and a CD of images for $200 - it is all taxable.

But if I sell Package B which includes 2 hours of my time and online image hosting for $195 and a CD of images for $5. Only the CD of images is taxable.

Is that what you guys understand it to be?

I can't believe we're talking about this - I am currently dealing with this issue myself! I met with an accountant and they said the same thing, that if the client gets a physical CD then the whole package it taxable. All of my packages include some kind of product so that makes all my packages taxable. I asked her about deposits - when they make a deposit they're not getting a product with that payment, so only the remainder is taxable? Should we all just raise our deposits to avoid paying sales tax on mostly our services? She hasn't gotten back to me yet...I'm sure she's busy with tax season. But I'll let you know when I find out.

My understanding -- from talking to someone at the Florida DOR -- is that if a tangible product, meaning anything, is delivered to the client (even by email or FTP) then you must charge tax on the entire job. That's what my boss does.

My feeling is that while you may be able to pick and pull certain parts of your packages and only charge tax on the ones that are specifically listed, I don't think it's a smart practice to split things up like that. Consumers are trained to pay sales tax on top of the purchase price without batting an eye so why make it more difficult on your end?

The other option is to just charge a little more, round it off, and pay the taxes yourself off of that "tax-inclusive" price you charge.

chris, they will reply with the tax code, not some random answer that they made up. it's very complicated and varies GREATLY from state to state. (we have to collect tax on everything here in PA, for example)

as far as you paying tax on that CD/DVD, that's a busiess expense and will be shown differently on your return. if you have a tax id number, you can avoid the tax if you are set up as a biz, but you will then only deduct what you paid.

i HIGHLY recommend you look for a really good accountant - someone who has experience with photographers and how we bill things.
it took me about 4 years to find one and i went through 3 to find the dude i use now. and he is worth EVERY penny.

i'm no accountant, i'm a photographer.
some things are better left to the professionals. (like photography and taxes.)

and just for the record, you collect tax, you don't charge it. it's not yours. you are collecting the tax for the state and you give it to them.

I was specifically told the opposite about the FTP or Email. I was told that if I could email the files, no tax would be applicable by the Florida DOR.


If anyone knows of an accountant in the Tampa Area that knows the photography business, please let me know as soon as possible. I'd rather not eat the cost of sales tax for upcoming jobs.

chris, until you find one, go here
do not be afraid to go to the source. they will help you quickly and you will get the correct info.

Like Robin said, go to the source. If you get your tax advice from other photographers or non-DOR people then you are running an unnecessary risk.

You shouldn't have paid sales tax on it at Staples if you were going to resell it.

Everyone's advice here is correct. Go to the state. It's not as hard as it seems.

And about the electronic transfer -- many states did that previously but most (I think) are doing away with that loophole because your customer is still getting a product.

oh and the state DOR gives the info for FREE!!!!

well, at least they make it seem that way.

Chris, werent we about to get into this discussion at dinner the other night.

My grandfather has run his own successful computer service business for 30+ years and we had a very long discussion about this last week. He said if your business is primarily a service you should be able to find ways around the taxes. It is all about the wording. If your package includes image files, leave the word CD or DVD out of the equation. Instead use the terms, "Digital negatives" or "Full Resolution files" only.

He also said that for custom items that are bought out of state, Florida should not be able to collect taxes on those. Im not really sure, maybe because its part of your service, and because that item was designed from your photo service it is not taxable.

I have left this issue open for discussion because I just feel that there is more to it. Like I said, he is in a different industry so he is not the know all be all, he could very well be wrong.

Another photographer in this area, Gina, told me that while in FL your services are not taxable, but if there is another item on the same invoice that is then the entire invoice is taxed. If you send out separate invoices, one for the retainer, then another for the rest of the package it is all taxed, because it is from a package which includes goods. I think this is something that I would stick with.

You will find the rules for this from an accountant or "the source" and you are going to find that you will need to pay taxes on everything you sell. It takes a lot to find the right accountant who wont want to do things by the book. You are looking for one that knows t and look for the loopholes, which is exactly what my grandfather likes to look for. : )

Like Damon said, consumers are expecting to pay taxes on everything. I have come to the conclusion that it will just be easier to charge the taxes and pay them out. If you do find a way around it, let us know! I would like to be able to cut my clients a break! (and save me the trouble as well!) lol

Remember, you don't "charge taxes," you "collect taxes." You're acting as an agent of the state.

Essentially, if you are producing any product, the labor required to produce that product is taxable. That means discs, prints, albums, anything...the labor is taxable, too. Otherwise, McDonald's could charge $0.99 for the labor to assemble a hamburger, and $0.01 for the bread, "meat," and fixin's and only collect tax on the $0.01.

But, like my friend Damon said, just contact the DOR. Every time I have ever had contact with the Florida Department of Revenue, they and their staff have been helpful, friendly and informative. I simply cannot speak more highly of them...it's an unfair stereotype to them, but they're completely not what you would expect from a government tax collection agency.

Definitely my mistake. Matt is 100% correct -- you only "collect" the sales tax for the state.

And if you prefer here is a link to Mike Colon's experience with California's tax-people: http://www.mikecolon.net/blog/2008/01/sale...rd-to-wise.html

I'll say it once more and drop it: Collect tax on your packages and the services you sell.

Here's what I found at the Florida Government Electronic Rulemaking system:

12A-1.041 Photographers and Photo Finishers; Sales by Public Officials of Public Records.
(1) Photographers are engaged in the sale of tangible personal property when developing or printing pictures for sale, or selling completed photographs or photostats or other tangible personal property. Such persons are required to collect and remit tax on the total amount charged to the customer for the sale of such tangible personal property.
(2) The charge for retouching, tinting, or coloring photographs is subject to tax.
(3) Chemicals used to clean tanks, equipment, and similar items are taxable. Chemicals which are not incorporated into and do not become a component of the finished product are taxable when purchased by photograph finishers for use in developing film and printing pictures for sale. Chemicals which are incorporated into and become a component of the finished product are exempt when purchased by photograph finishers for use in developing film and printing pictures for sale. Form DR-3, Chemicals Used by Photograph Finishers – Taxable, and Form DR-3A, Chemicals Used by Photograph Finishers – Exempt, are incorporated by reference in Rule 12A-1.097, F.A.C.
(4) Sitting fees charged by photographers are taxable as part of the sales price when the transaction is in conjunction with a sale of tangible personal property. The charge for sitting fees that are not in conjunction with the sale of tangible personal property is not subject to tax.
(5)(a) The fee prescribed by law, or the actual cost of duplication, for providing copies of public records by public officers or public employees under Chapter 119, F.S., is exempt from sales tax.
(b) Actual cost of duplication means:
1. The cost of the materials and supplies used to duplicate the record, but does not include the labor cost or overhead cost associated with such duplication; unless
2. The nature or volume of records is such as to require extensive personnel assistance or resources, in which case a special service charge, based on the additional cost incurred, may be added to the actual cost of duplication; however
3. The charge for copies of county maps or aerial photographs supplied by county constitutional officers may also include a reasonable charge for the labor and overhead associated with its duplication; and
4. The fee charged by custodians of public records for remote electronic means, granted under a contractual arrangement with a user, which fee shall include the direct and indirect costs of providing such access.
© The charge for copying documents and other papers which are not public records and which can be copied by a dealer engaged in such business represents the sale of tangible personal property and is taxable.
Cross Reference-Rule 12A-1.072, F.A.C.
Specific Authority 212.17(6), 212.18(2), 213.06(1) FS. Law Implemented 119.07(1), 119.085, 212.02(14), (15), (16), 212.08(7)(v) FS. History– Revised 10-7-68, Amended 12-8-68, 1-17-71, Revised 6-16-72, Amended 12-11-74, 5-27-75, Formerly 12A-1.41, Amended 7-30-91, 8-10-92, 6-19-01, 8-1-02.

Yeah, we were definitely talking about this the other night. The easy answer is to just charge tax, although I have heard various answers now from the DOR, CPAs, and other photogs. I do know that the statement above is false. Once you register for your sales tax, you will CLEARLY see a nice line asking for exactly that type of stuff.

Damon,

Do you think most of the loopholes use this (see below) as the basis. If you actually set the CD as a totally separate item that is not required to be purchased, then is it still in conjunction with the sitting fee? I know your thoughts, now I am just discussing the topic. (My contract has been updated by the way to include sales tax on packages so you guys already won me over )

(4) Sitting fees charged by photographers are taxable as part of the sales price when the transaction is in conjunction with a sale of tangible personal property. The charge for sitting fees that are not in conjunction with the sale of tangible personal property is not subject to tax.

Just one more thing. I went to fill out the form to ask a question to the Florida DOR on their website, and at the top it says this clearly:

"Note: The response you receive will be the opinion of the writer and is not legally binding."

Lovely, so the DOR person responding still doesn't even count legally in an audit.

Thanks Damon, that answered my question. I was wondering about the retouching/editing part.

It's possible but after reading the tax code for the state as it pertains to photographers I'm pretty convinced that there really aren't any good reasons to not collect taxes on your services and products.

When I hear people talk about "loopholes" in conjunction with taxes I immediately start to worry for them. Most of the time they're wrong -- and even if they aren't the audit process is an onerous one.

My question: Why even risk it?

I don't think the state would get upset if you happened to be collecting a little more taxes than you theoretically could if you shaved everything down on the invoice(s).

FWIW...this is 100% accurate, as told by my accountant 3 days ago. Do not itemize, do not collect tax. You are selling your services. Until I get warned by the IRS, this is how we roll. Besides, Uncle Sam gets A LOT of money from us from album sales to begin with.

FYI -- it's the State of Florida's Department of Revenue, not the IRS. It's still The Man, just not The Big Man or Uncle Sam

Keep payin' those taxes! Lil' Johnny needs schools!