PA sales tax

<p>I have a photography business with my husband and about 95% of our business is photographing weddings. PA law states that all photography services are subject to a sales tax of 6%.<br>

My issue is what do we claim on our monthly sales tax payments? Since we have a deposit and 2 payments (typically)- do we claim everything the month of the wedding or the month we receive the payment? We've been paying the month of the wedding, when services are rendered but was explained by our accountant that we should be paying tax when we receive the income (payment).<br>

I've spoken to a few different CPA/tax professionals and I get mixed answers- you pay when you receive payment AND you pay the month of the wedding when the contract is fulfilled. <br>

Help, I'm so confused! To me it seems like it really shouldn't matter just so the tax gets paid, but I want to do it right and by the law.</p>

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<p>explained by our accountant</p>

</blockquote>

<p>Is this a certified public accountant? If so, you're probably OK taking their professional advice as real guidance. But more to the point: contact your state tax authority. They deal with this stuff all the time. A lot of businesses take deposits and deliver on skewed schedules. This is nothing new, and PA surely has a well-articulated policy on it.</p>

<p>Yes, from the pdf available here:<br>

<a href="http://www.revenue.state.pa.us/portal/server.pt/community/sales%2C_use___hotel_occupancy_tax/14487">http://www.revenue.state.pa.us/portal/server.pt/community/sales%2C_use___hotel_occupancy_tax/14487</a></p>

<p>"Taxes and fees must be collected at the time of sale, unless the sale<br />is on credit. Taxes and fees on credit sales must be remitted within<br />30 days of the date of sale. A seller is liable for reporting and remitting<br />taxes and fees with the tax return covering the period in which<br />either a taxable sale was made, or the tax or fee should have been<br />collected."</p>

<p>Matt- Yes it's a CPA who works with other photographers as well. I will probably give the Dept. Of Revenue a call and explain our own situation to get their advice tomorrow. Thanks.</p>

<p>Phil- I have read the 717 thoroughly and cut and dry it sounds like you pay the tax when you receive the money, but my confusion is can a payment schedule be considered "credit"? Thanks.</p>

<p>Okay, then, let's go right to the source. Pennsylvania Code Chapter 33; Subsection 33.4 (scroll all the way to the bottom). this is a little more detailed:</p>

<p><a href="http://www.pacode.com/secure/data/061/chapter33/chap33toc.html">http://www.pacode.com/secure/data/061/chapter33/chap33toc.html</a></p>

<p>" (a) Tax collection for credit sales. If a sale, with respect to which a tax is required to be collected, is wholly or partly on credit, the seller shall require the purchaser to pay the full amount of the tax due on the entire purchase price at the time the purchase is made or within 30 days thereafter. The failure of the purchaser to remit the tax due to the seller does not relieve the seller of the obligation of reporting the sale and paying to the Commonwealth the tax he should have collected. The tax shall be remitted by the seller with the tax return covering the period in which either the purchase was made or the tax was or should have been collected."</p>

<p>Total tax is due for the quarter (or month, depending on your filing schedule) in which the sale was made. The last sentence indicates to me (IANAA) that if the 30 days falls outside the initial filing period, then the tax is due for the next filing period. It might also be considered as a layaway, in which case the total tax is due for the filing period of the sale.</p>

<p>In most cases with layaways, the sales is considered taxable when the inventory is set aside for the customer. To the extent that your time is your inventory, that setting aside of your schedule isn't a bad analaogy. But I can't imagine that your photographer-serving CPA hasn't dealt with this many times.</p>

<p>Right or wrong I always paid when I collected it, In my mind the sale wasn't complete until monies were paid. Then a number of years ago I purchased an invoicing and accounting software. When ever I ran sales tax reports it showed sales taxes when invoiced so I started paying that way. I know this isn't a real answer but.. accounting software tells me to pay it when invoiced not after collected.</p>

<p>Check with your accountant. Are you set up on a cash or accrual basis? This should determine your answer.</p>