Washington Sales tax question.?

I am a photographer. i own a business in Washington and I had a questions about collecting sales tax when i do services. I do not sell any products like prints albums, ect. I do wedding photography as a service but only deliver their photos on a cd so technically im not giving out any "tangible goods", correct? I don’t sell my cd because it comes with the service. if i would make them albums. i would collect sales tax on the amount i charged the client for the albums separate from the service but would not collect sales tax for the service. is this correct?

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2 Responses to “Washington Sales tax question.?”

  1. Tim says:

    Not correct.

    In most states a CD is considered a tangible good. In some states even delivering the images electronically through FTP or email is considered a tangible good. Rarely are digital images considered separate from the service because the service is required to make the CD.

    Look at it this way. Lets say you make and sell chairs. You can’t say that the chair has $5 worth of materials and $195 worth of labor so you are only collecting sales taxes on the $5. In every state, since the labor (service) of making the chair is the main part of the chair’s final sales price, you would need to collect taxes on the entire $200.

    The sales tax law in Washington is a bit ambiguous because it is really out of date. It states that licensing fees are not considered taxable but the creation of negatives (film) for clients then the "service" fee is really the price for producing the images and is therefore taxable. The law has not been updated since 2003, so there is no mention of digital imaging.

    However, I would likely interpret that the production of digital images on a disc would not be legally distinct from the creation of film negatives, and therefore would be subject to sales taxes.

    The way I would interpret the tax law in Washington is that whatever service fee you charge to produce the digital images would be subject to sales tax.

  2. tro says:

    for Wash sales tax you need to access their web site
    but with your scenario, yes the cost of the CD would be taxable in my state

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