Do you collect sales tax on internet sales?

Discussion in 'Business of Photography' started by graham_martin|2, Oct 11, 2010.

  1. My expanded question is, do you collect sales taxes on internet sales of pictures or products (such as a T-Shirt with a photo on it) when the buyer is in the same state as you are?
    I use a Zenfolio website and all the prints are made by other vendors such as MPix. Zenfolio offers an option to charge sales tax. Since I am just getting started into professional photography I don't want to run afoul of the state of Florida for failure to collect sales taxes.
    I would be interested in what experienced professions do.
  2. While I am not a lawyer, there are several observations I'd throw out for comment by those who do know something about the "law"
    1. Lots of companies do NOT pay state sales tax when they have no "presence" in the state in question.
    2. All of them that I know of--the biggies, that is--will collect whatever applicable state taxes are involved in sales within their own states or states where they have presence.
    3. States do want to collect taxes on internet sales in general, but so far haven't been able to make them stick.
    4. Many states attempt to make the buyer in their state liable for some kinds of taxes. This may be legal, but many people strongly object to this and passive resistance to it is common.
    If I were you, I'd certainly collect sales taxes on any of your sales in Florida if you are resident there, vote there, and pay other taxes to the state.
  3. I posted a similar question a few weeks ago. I had to go over 3 years of past records but ended up not paying much past tax because many of my out of state sales (like Smugmug) were not taxable. If you got your business license in the last couple of months then you should of gotten a letter from the Florida Department of Revenue regarding Florida's Tax Amnesty. The amnesty ended Sept. 1. I suggest calling your local Florida Department of Revenue office compared to their toll free number. The reps at the toll free number were not very helpful. Check out my link.....especially my last post which may answer your question. Not sure if it matters if the company is in FL. or not.
  4. Check with your FL tax people, but in CA it was necessary to collect (and pay to the state) tax on all in-state sales. This was for all in-state sales regardless of how that sale was conducted: in person vs mail order. CA has different tax rates based on county and we had to account for both the amount and location of the sale. You should have received this information when you got your business license and tax number. Your accountant should know this stuff already and be able to explain it to you. They should have also been specific in terms of WHAT needs to be taxed. For example, in CA it is goods that are taxed but not services or food.
    ... and like JDM said, out of state sales is a different story but I believe it becomes a responsibility of the buyer and their state to work out the tax payment. In CA there is a line on the state tax form where we are expected to report out-of-state purchases and voluntarily comply with the tax law by paying.
  5. ... but in all sincerity, it sounds to me like you should invest a few dollars and some time consulting with an accountant or tax attorney rather than relying on inforamtion from sites like this. Your question could probably be answered within 15 minutes if you ask a (tax) pro!
  6. ... and whatever you do, be careful about collecting taxes if you're not paying them to the state; Don't do it unless you would like to do some time on the pea farm!
  7. Graham - I have a Zenfolio account too, and most of my purchases are in-state (California for me). All prints and other physical products automatically have California sales tax applied; I don't remember checking any separate box for this? But I am relatively new to this business as well.
  8. Graham, before I would spend money on accountants or lawyers I would contact the Florida Department of Revenue. I would hope that they would know more about taxes to them more then anyone else. I'm sure they could answer your question. I was advised on the other link to also get professional help (accountants/lawyers) but it was not needed. Why spend the extra money if the Florida Department of Revenue can answer your questions? When I got my business license from the county tag/business license office I should of received additional info regarding sales tax, online purchases etc... but somebody messed up. That is why I did not find out that the sales tax did not even exist until I received the tax amnesty letter. Florida is hurting and looking for ways to collect revenue. That is why they sent out the tax amnesty letters. It scared the heck out of me. At any rate make sure you do it correctly. If Florida does an audit on you then the burden will be on you to produce all your records rather then just fill out the form and pay what is owed. Like Zenfolio, Smugmug offers an option to charge sales tax but I was told by the Department of Revenue that it was up to Smugmug to pay the tax, so I have not added sales tax to my Smugmug online sales, since I am trying to keep the cost down for the customer. The gray area is if Zenfolio is in Florida. I glanced at their website and could not find where they were located. If you ended up having to pay taxes because they are in Florida, then maybe you should consider looking into a company out of state like Smugmug. I have used Smugmug for 4 years and they are fantastic. Only complaint is no phone support and reply time to email takes longer then it did when I first signed up with them. I just checked my sales history and with over 1,000 sales I have never had 1 complaint from my clients ordering prints/products through Smugmug. I would post my website but I always worry about breaking rules. You can see my website by clicking on my name and then Personal Home Page.I made my site very basic but members can make very nice websites if they want.
    The local Department of Revenue Tax Specialist that I dealt with was real nice and helpful. I can send you her phone number by private message if you want to talk with her.
  9. FYI - Zenfolio is located in the state of California.
  10. John Hill, I would greatly appreciate if you would PM the FL Dept of Revenue phone #.
    Everyone's responses have been most helpful. So far I haven't made any sales since I am still in the process of setting everything up, and so I don't have to worry about landing in the pokey for failure to pay taxes. I feel I am getting pretty close to selling some pictures from my Zenfolio site, and so I need to be prepared in case they remit some FL sales taxes to me which I will then pay to the Dept. of Revenue.
  11. Graham: then just look around for a phone#
  12. Graham I am sending you her number, but since you have no sales yet there is nothing to worry about. Don't forget that you will owe taxes not collected from items you may of bought on the internet that are related your business if you have your business license. I owed more money from that then my FL. sales. Once you start selling your work you will have to pay tax on a quarterly basis. Ughhh...more paperwork. You need to see if there is a local office near you. It will be easier for someone to show you how to fill out the Sales and Use Tax Form ( DR-15CS )
    I also found out about form DR-13. It is the Annual Resale Certificate. It is free if you file for it online or $5.00 if you fill out the form at the office. From what I understood You can use a signed copy of your current Annual Resale Certificate to buy products tax-exempt that you will resell or re-rent. You present this certificate to stores when buying things that will be used for CDs and frames. My local frame shop told me about it. They give discounts if you have the certificate and plan to buy quantity (like 20 frames)
    Here is the list of local Florida offices. Are you near one?
    Hope this helped. Paperwork confuses the heck out of me.
  13. stp


    There is currently a move in Congress to make interstate sales subject to state sales taxes (for those states that have a sales tax). State budgets are hurting, and they are looking for all possible sources of income. Right now, as JDM pointed out, the only companies with online sales that collect a state sales tax in Washington State are those that have a physical presence in the state (e.g., Cabelas). Don't quote me on this, but I believe the current law requires all interstate sales to be taxed in Washington State, but there is no enforcement and no adequate mechanism to track such sales; the new law would put more teeth into the current law.
  14. Graham, I got your email. Let us know how it works out.
  15. Thanks John. It's been a little hectic, but I plan on call the Fl Dept of Revenue later this week.
  16. Graham, I don't think there is a need to worry. I just received a letter from the state today. They sent me the forms and even envelopes to send the checks in:) My next payment is not due until 1/1/11. But if you do have a business license then you may owe back taxes on any photo business related items (cameras, lens, computers, etc.) you bought online that you were not taxed on. Then again if you have not made any sales yet, then I would hope that you don't owe anything yet. Give us a shout on the outcome. There might be some other FL. photographers that are following but not wanting to post because that would leave a paper
  17. I haven't made any sales yet and I only did my fictitious name filing about a month ago. That really amazes me that once I do start generating income that my gear purchases made on line would be subject to sales taxes. Then again, I would think that the cost of that gear would be a business deduction. Time to start keeping some records.
  18. John, I spoke to the lady whose name you gave me at the Florida Dept. of Revenue. The bottom line seems to be that I am not responsible for paying any sales taxes. She said that my services as a professional photographer are not subject to sales tax. If the client orders prints on line from an out of state provider then I wouldn't be liable for sales taxes there because I never had anything to do with producing the product, and the client would have paid the 3rd party provider and not me. The print provider would not be liable for collecting sales tax unless they were operating in Florida. What she did tell me was that, strictly speaking, the ultimate Florida resident who buys the prints is liable to pay sales tax. She then went on to say that it hardly ever happens for the in-state buyer to voluntarily pay sales taxes on photographic prints that they have purchased on line from an out of state printer.
    Having said all of this, she did not put it in writing. I am still going to check with the North Florida Professional Photographer's group, and see what their members do. In fact, in order to become a member of their organization you have to submit a copy of your Sales Tax forms that you have registered with the State in order to become a member. That leads to the obvious conclusion that somewhere along the line, I will be responsible for collecting and paying Sales Taxes for at least a portion of my product.
    Stay tuned!
  19. Graham, I am glad you spoke to the lady here in town that I referred you too. She was very sweet compared to the ones I spoke with at the toll free number. I guess they were having a bad week/month:)
    Would like to hear if the Florida Professional Photographer's group has anything to add. It was all new to me.
  20. Slightly off topic, but you will also be liable for quarterly Federal "self employment taxes" which can be onerous. Having paid those for years I would advise you to plan ahead for the 4 due dates that come up each year.
  21. Yes Bob, the Feds also get their quarterly share:) I certainly urge everyone not to ''forget'' the Feds. Actually, the IRS was pretty helpful in answering questions regarding non-taxed items bought on the internet in regards to my state taxes.
  22. Thanks for the reminder about the Feds. I will buy the Quicken software so that I can start keeping records of both income and expenses. I am also still waiting to hear back from our local professional photographers association to whom I have posed the tax question. I will post an update once I hear from them.

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