Sales Tax Collection or Not

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Sales Tax Collection or Not

Postby Ron » Thu Feb 17, 2011 9:19 pm

Hi to all of you running a DVD SlideShow Business....

I'm in a little bit of a quandry as I don't know proper protocol. I am in aheated friendly debate. Should I be charging sales tax for our DVD services or not, and then forwatding those monies to the proper agency. I'm assuming protocol might be different in different states but I'm hoping to gain knowledge in this area as well as doing things properly on the up & up.

I'm not talking about claiming your earnings as income but just in regards to sales tax. This might also include city or county sales tax. I tried googling it and it seems like I should be charging sales tax but wording gets confusing. Is there a difference between handing a dvd (tangible) to a client versus uploading for them to have. etc...etc...

Would appreciate any comments from Those In The Know

Thanks Much Ron
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Re: Sales Tax Collection or Not

Postby MG - Admin » Thu Feb 17, 2011 9:53 pm

Ron:

It does vary state to state, as well as within your local area of business. It's best to speak with an accountant or tax person to get a specific answer to your question where you do business.

For my photography business here in California I don't have to collect sales tax if I deliver my images as a download. If I deliver them burned onto a CD or as a print I am required to collect sales tax. Like I said, it will vary by location, but I think you'll find this to be a fairly common response.

Good luck!

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Re: Sales Tax Collection or Not

Postby stickgirl » Fri Feb 18, 2011 5:41 am

When I did this as a business, if the purchasing customer lived in MD, which is where my business was incorporated, I had to collect sales tax. I wasn't taking a chance on having the state or the IRS coming after me, so I did everything by the book - I incorporated my business, I got a employer identification number, I registered for state taxes and I paid the royalties for writing the data to a dvd. I'm sure there was more that is escaping me for the moment.

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Re: Sales Tax Collection or Not

Postby Ron » Sat Feb 19, 2011 3:02 pm

Thanks Mike for your suggestion, I 'm starting to think NY is like Ca. in that if you give the client a tangible product then you should be collecting taxes if delivered online than taxes shouldn't be collected.

Kathy thanks for your comments as well, I'm setup ready to go but haven't charged sales tax as I'm not 100% sure I should be charging my customers, as few as they may be as I only do at max 20 shows a year plus a handful of photography work. But still like to keep it on the level.

I'm a bit surprised other members haven't chimed in here, there are a bunch of sellers here ... photogrphers, DVD show makers, styles/templates & transition makers etc... There is always chatter regarding royalty rights for music & photographs and such but I really don't read much regarding business income taxes, sales tax or even home/office deductions. I guess its not a topic of discussion.
Thanks Ron
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Re: Sales Tax Collection or Not

Postby debngar » Sat Feb 19, 2011 3:26 pm

Ron wrote:Thanks Mike for your suggestion, I 'm starting to think NY is like Ca. in that if you give the client a tangible product then you should be collecting taxes if delivered online than taxes shouldn't be collected.

Kathy thanks for your comments as well, I'm setup ready to go but haven't charged sales tax as I'm not 100% sure I should be charging my customers, as few as they may be as I only do at max 20 shows a year plus a handful of photography work. But still like to keep it on the level.

I'm a bit surprised other members haven't chimed in here, there are a bunch of sellers here ... photogrphers, DVD show makers, styles/templates & transition makers etc... There is always chatter regarding royalty rights for music & photographs and such but I really don't read much regarding business income taxes, sales tax or even home/office deductions. I guess its not a topic of discussion.
Thanks Ron


Hi Ron,

1. The forum has been unpredictably up and down a lot lately.
2. Don't go by CA law. The laws can be different in every state. Read the specs on stuff your state says related to photography.
3. Mike G lives in CA, same as me so what I might say isn't very additive to the discussion.

To be additive....I'm pretty sure if any part of what a customer receives is tangible, the entire service is also taxable since it's related to the tangible product the customer received. This means that sales tax should be collected on a session fee (service) to take the pictures too, not just collected on the purchase of a print or hard copy of the Cd/DVD.

Mike is right - contact a tax person licensed in your state to be on the safe side if you still have questions. :roll:
Last edited by debngar on Sun Feb 20, 2011 6:19 am, edited 1 time in total.
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Re: Sales Tax Collection or Not

Postby lynn1102 » Sat Feb 19, 2011 4:54 pm

I just Googled New York Sales Tax and come up with 57,000,000 hits. I did scout some of the pages and it seems that each county has it's own tax system. I couldn't find anything for photography or video. Only film stuff that didn't seem to relate.
Find a good tax man or keep a very low profile. 8)

Here in PA, we have to charge tax on the total amount of the service invoice. Even if a client downloads stuff and I charge for it, I have to collect tax, which so far is the same state wide. They're working on screwing that up.

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Re: Sales Tax Collection or Not

Postby GEQ » Sat Feb 19, 2011 10:25 pm

With all due respect paying the sales tax and not the income tax is not keeping things on the up and up. Not sure how these agencies interact with eachother but one may key an interest by the other.

All or nothing may be a better approach.

Glen

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Re: Sales Tax Collection or Not

Postby Ron » Sat Feb 19, 2011 11:31 pm

With all due respect paying the sales tax and not the income tax is not keeping things on the up and up

Glen the reason I wasn't inquiring about income tax because I know that any income earned must be reported and taxes paid on it why you think i was doing differently I'm not sure.
As far as sales tax goes it seems the consensus is that all my services should include a sales tax and then forwarded accordingly.
Thanks you all for your input.
Ron
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Re: Sales Tax Collection or Not

Postby juicedownload » Sun Feb 20, 2011 11:00 am

lynn1102 wrote:Here in PA, we have to charge tax on the total amount of the service invoice. Even if a client downloads stuff and I charge for it, I have to collect tax, which so far is the same state wide. They're working on screwing that up.

Lynn


Interesting.
For the state of PA, I paid an attorney who told me otherwise. From what I recollect, when I create a video slideshow, I'm not creating a product, but a service. Thus, I was told, this type of service is not taxed upon sale. Because of the newness of this type of service, it's escaped the tax - for now. However, once the state government truly realizes the severity of their debts, maybe they'll soon make the necessary changes.

Tim

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Re: Sales Tax Collection or Not

Postby Ron » Sun Feb 20, 2011 11:37 am

Hi Tim
I would have to whole heartily disagree with you as I'm beginning to understand these convoluted laws. A DVD is a tangible product & thus sales tax should be collected.
This discussion of one thinks this and another thinks that is exactly why I posted this topic. I'm a little frugal for paying others when I could research it myself but I don't think even the law is written clear enough on this topic.
The photograph below, the 2nd highlighted item, 1st item hightlighted in error, is probably where DVD creation might fall under - at least here in NY. I also now believe if the client isn't based in NY then I do not need to charge them sales tax.
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Re: Sales Tax Collection or Not

Postby juicedownload » Sun Feb 20, 2011 4:59 pm

Ron wrote:Hi Tim
I would have to whole heartily disagree with you as I'm beginning to understand these convoluted laws. A DVD is a tangible product & thus sales tax should be collected.
This discussion of one thinks this and another thinks that is exactly why I posted this topic. I'm a little frugal for paying others when I could research it myself but I don't think even the law is written clear enough on this topic.
The photograph below, the 2nd highlighted item, 1st item hightlighted in error, is probably where DVD creation might fall under - at least here in NY. I also now believe if the client isn't based in NY then I do not need to charge them sales tax.


I see your point Ron, but I don't have much to say. I'm not well versed in the laws. My attorney is paid good money so that I don't have to worry about such things.

Tim

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Re: Sales Tax Collection or Not

Postby im42n8 » Fri Feb 25, 2011 8:22 am

Check with the city where you get your business license. Discuss this with them. It may not just be a tax on a tangible product (like the CD/DVD and labels and container). Seems you may to pay for delivering the product too if you use city roads to do that. And, you may have to pay taxes to other cities if you cross city lines to deliver those products. Yep, all kinds of convoluted rules that the city can discuss with you.

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Re: Sales Tax Collection or Not

Postby BarbaraC » Sat Feb 26, 2011 5:24 am

im42n8 wrote:Check with the city where you get your business license. Discuss this with them.

Ask a simple question and you'll get as many answers as the number of people you ask because, as far as I can tell, no one anywhere understands the tax laws, not even the people writing them. That said, as far as I can tell by having purchased items from various states in this country, the sellers seem to have to collect sales tax from me only if they have a presence in NYS. I'm not sure, but there may be some reciprocal agreements with a neighboring state or two.

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Re: Sales Tax Collection or Not

Postby tdew » Sat Feb 26, 2011 5:44 am

Our tax guy told us that we don't need to collect sales tax on the DVDs - because the sales tax was already paid on the physical medium - the rest is a service which isn't taxable.

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Re: Sales Tax Collection or Not

Postby earthlingirl » Sun Feb 27, 2011 7:59 pm

I agree with Barbara. In fact I asked my tax guy yesterday and he did say that you would not necessarily have to apply sales tax to your prices but who ever I sell a dvd to in Wisconsin(where I live) I am required to pay sales tax. Outside of the state, no. I guess there is a lump sum that you estimate you might be selling and then pay that in advance. They may ask you to pay more if you sell more than what you already paid in for. That is my take on it anyways.
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