Wedding Retainer Refund

Well, after 30 years of doing this, I have run into a bride that we seem to

have lost our communication with each other. Alot of "he said, she said" going

on with the engaged couple. At any rate, as of today I have decided to return

their retainer. Since the wedding is not until October, I should be able to

get another booking. Of course Sale Tax was collected. Should this sales tax

amount be returned to the Bride also? Just not really clear on this since this

not MY money, but the states.

Yes, of course it should be. Can't you get "get reimbursed" from the state for the tax; they surely can't collect taxes on a good or service never rendered. Since you didn't do anything yet to "earn" the state their tax, it's not their money either!

In MA, where I live, you can only get your sales tax back from the state tax division within 30 days, so if it's been longer than that I subtract it from the refund, on the few times I've refunded a retainer

 

Jim Marby

I don't know the law in your state but I have never considered a "retainer" as a "taxable sale". When the job is complete the final invoice has the sales tax on it. When you fill out your next sales tax return deduct the amount of the refunded retainer from the "taxable sales" on the tax form when figuring out how much to pay. Keep notes of what happened and copies of any written communications between you and the client just in case you're audited. You shouldn't have any problem doing it that way. I think that most of us have both taxable and tax exempt "sales". The latter category might include a "labor only" situation when you shoot for another photographer and they're the one collecting the tax, or shooting for a non-profit organization like a church, the Boy Scouts, etc. You should get a copy of their tax exemption certificate for your files, though.

The paperwork will be less trouble by just reducing your current month's sales figure (subtract the returned retainer) and that should reduce your sales tax payment by the amount you already paid.

 

 

 

Or see your bookkeeper if you use one.

Gerald,

 

Good idea, thats what I'll do the next time.

 

Jim Marby

My CPA made the following suggestion that I follow. I don't accept any tax payment on the retainer. So when I ask for the retainer of 50%, I receive 50% of the package price. The remaining 50% of the package price + all applicable taxes are due one week prior to the wedding.

 

Rob Greer

Thanks Gerald, that does seem to be the simpilist route.

Not too sure about USA laws but in Canada, a deposit is refundable but a retainer (which all lawyers use) is usually not refundable. When I go over the wedding contract with my clients, I ensure that they understand that the initial retainer is non-refundable in case of cancellation by the client. Just my two cents worth.