Photographers & Photo Finishers
The Arvada Municipal Code imposes its sales/use tax upon the purchase price paid for tangible personal property and certain taxable services purchased at retail in the City. Retail sales are sourced to the location where the purchaser takes possession of the purchased property ("destination sourcing").
Photo finishers are engaged in the business of selling tangible personal property to their customers and their sales are taxable. The purchase of materials that become ingredients or component parts of the finished picture, such as mounts, frames, and sensitized paper, may be purchased by the photo finisher tax-exempt because these items are purchased for resale. Any other purchases made, that do not become a part of the product sold to the customer, are taxable to the photo finisher at the time of purchase, or if no tax was paid, subject to Arvada use tax.
Professions That Use X-Ray Film
Physicians, surgeons, dentists, hospitals, laboratories, and other professions that purchase X‐ray film and then expose it for the purpose of diagnosis or examination are the users and consumers of the film and all related supplies used to expose and develop the finished product. These items are subject to sales tax at the time of purchase or use tax due to the City of Arvada.
The conversion from one medium to another medium, such as VHS tapes to DVD, is subject to City sales tax. The purchase price should include any costs for labor, profit, and materials. The true object to the customer is the DVD which is tangible personal property.
Certain photography professionals are in the business of selling tangible personal property to their customers while others provide services only. In determining whether a transaction involves the sale of tangible personal property or the performance of a service, the City will examine the transaction from the purchaser's perspective. If in the eyes of the purchaser, the object of the transaction is the acquisition of tangible personal property, then the transaction, or its use after the sale, is taxable. If the essence of the transaction is, from the purchaser's perspective, the acquisition of a service, then the purchase or subsequent use is not taxable, even though some tangible personal property is incidentally transferred with the performance of the service. The City will also consider the value or charge for the service versus the value or charge for the tangible personal property transferred.
Photographers - Provide Tangible Medium
When a professional photographer is hired to photograph or record to DVD for a special event, the photographer will provide a customer with the photographs, DVDs, or other tangible medium, which includes electronic photo files is required to charge sales tax on the entire amount (including consultation, sitting fees, and/or other production charges) since the true object sought by the customer is the photographs or DVD. The photographer may purchase the film, videotapes, DVDs, or other supplies which directly become a part of the item sold tax-exempt for resale. Sales tax must still be paid on camera equipment, lenses and other goods not purchased for resale.
When a transaction is regarded as a sale of tangible personal property, City sales tax applies to the full amount of furnishing the item without any deduction for labor, skill, thought, time spent, or other expenses of producing the property, even if separately charged to the customer.
Photographers as a Service
Photographers that do not directly provide a customer with photographs, DVDs, or other tangible mediums, which includes electronic photo files, are the users of their equipment, film, and other materials, and are subject to sales tax at the time of purchase or use tax if no sales tax was paid. These photographers may charge their customers a fee for the service or labor, but then electronically send the end product (photographs) to a third‐party or website whereby the customer may purchase the photographs in any size and quantity desired. The third party is responsible to collect and remit the appropriate sales tax for such purchases.
Photographers - Taxable Purchases
Photographers are the consumers of equipment and supplies used in conducting their business and must pay sales tax when purchasing these items. The photographer must pay use tax on the item if sales tax was not paid at the time of purchase. An example of when this can happen is when the photographer purchases equipment from an out-of-state vendor that does not collect sales tax. Examples of equipment and supplies upon which the photographer must pay sales tax include:
- Computer software (including remote access software)
- Props used for staging
- Office Supplies
- The photographer charges $3,500 for a contract to provide a photographic session. This amount is billed either as a lump sum or broken down on the invoice showing $3,000 due for consulting, sitting, or other fees and $500 for a disc or access to digital photos. Regardless of whether the pictures are purchased on a disk or accessed digitally, the full amount of $3,500 is subject to sales or use tax.
- ABC Photography charges customers a session fee. In return for the session fee, the customer receives ABC Photography's services including taking the photos, editing the photos, and posting the photos in digital format on ABC's website. The customer is then provided a password allowing them access to the photographs on the website, where the customer may download the photographs (or not) at their convenience. There is no additional charge to the customer for downloading the photographs. ABC Photography's fees are subject to sales tax.
- ABC Photography takes school portraits for customers and charges a sitting fee for this service. Prints will be sold to customers at a separate charge. ABC correctly charges sales tax to customers on these sitting fees, which are services rendered with respect to imprinting tangible personal property (the prints).
Note: This information is a summary in layman's terms of the relevant Arvada tax law for this subject, industry, or business segment. It is not intended for legal purposes to be substituted for the full text of the Arvada tax code. However, the tax guide shall be used in conjunction with the Arvada tax code (chapter 98) in determining tax liability.