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Small Business Tax
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Sales Tax
Should I charge sales tax when selling digital photos
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Should I charge sales tax when selling digital photos
Q: I recently started a small business providing product photography. I send my clients digital photographs through the Internet, so there are no physical goods exchanged (e.g., prints or CDs). I also retain the copyright and intellectual property rights but offer unlimited use to my clients. Is this transaction sales tax free because it is a service?
The transaction is exempt from California sales tax not because it is a service, but because it is not the sale of tangible personal property. According to the Board of Equalization Sales and Use Tax Annotation 120.1200, the transfer of digitized photographs that are not in a tangible format (disk, tape, or other storage medium) is not a taxable sale.
Jennie Hoopes, CPA, a team member with Sweeney Kovar, LLP, in Danville, Calif. You can reach her at (925) 648-3660(925) 648-3660 or Jennie@cpaskllp.com.
Have a question for a CPA? Ask it here.
In accordance with IRS Circular 230, the information on this website is not intended or written to be used, and cannot be used as or considered a "covered opinion" or other written tax advice and should not be relied upon for the purpose of avoiding tax-related penalties under the Internal Revenue Code; promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein; for IRS audit, tax dispute or other purposes.
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