June 29th, 2016
I have launched my business and finally gotten my first paying job, then I went to make my first invoice and can’t figure out if I have to charge my customers WA State Sales Tax? I have been reading the state website about taxes and still haven’t figured it out. Any advice?
Stephanie, I can see why you are confused. The Washington department of revenue site is very confusing. It gives two different answers to your question on the same page. Since I moved out of WA before they came up with this rule on digital products I checked with two real estate photographers currently in the Seattle area and they said below is the key paragraph. According to the Photography Tax Guide tab #5 on the Washington Department of Revenue site:
Royalties and Digital Photographs
The granting of specific intangible rights to use a photo is not a sale of digital goods subject to retail sales tax, even when the photo is transferred to the buyer electronically. The method of delivery – whether tangible (i.e., print or CD) or electronic – does not determine the taxability of the transaction.
So no, as long as you license your clients to USE the photographs you shoot it is not considered a sale in the traditional sense so you don’t have to collect sales tax. On the other hand, you sell all the rights to your client (ownership is transferred to the client), then you do need to collect sales tax. Another big motivation to license your photos only for the duration of the listing! This is my interpretation of the WA DOR website and input from some practicing Washington real estate photographers. But don’t take my word for it, get a formally written ruling from the Washington Dept of Revenue.
Update 7/6 2016: I just hear back from Stephanie and she says that the WA DOR agrees with our analysis above (as long as you license your clients to USE the photographs you shoot it is not considered a sale in the traditional sense so you don’t have to collect Washington sales tax).
States in the US vary quite a lot in this area. Here is a summary of US state policy in this area.