Tax Type
Retail Sales and Use Tax
Description
Labor charges in connection with sale of photographs
Topic
Taxability of Persons and Transactions
Date Issued
12-13-1985
December 13, 198
Re: Request for Ruling/Sales and Use Tax
Dear ****
This will reply to your letter of November 7, 1985, in which you seek clarification as to how the sales tax should apply to charges made to customers for labor in connection with the sale of photographs.
The primary rule to remember in computing the sales tax is that the tax is based upon the total charge made to the customer for a tangible product. This policy is mandated by Section 58.1-602.17 of the Code of Virginia, which defines the term "sales price", upon which the tax is based:-
- "Sales price" means the total amount for which tangible personal property or services are sold, including any services that are a part of the sale . . . without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, losses or any other expenses whatsoever. Emphasis added
To use an example set forth in your letter, when a photographer is commissioned to shoot a job and separately bills his customer for shooting time, film developing, and film tinting, the tax would apply to the total charge for the products sold, including the time, developing, and tinting charges. However, when a photographer bills a customer for services that are not in connection with the sale of a tangible item, the tax would not apply. For instance, when a photographer shoots photographs for a customer, but the customer decides not to purchase any of the photographs, the tax would not apply as a retail sale does not take place. Similarly and as noted in Section 630-10-82 of the Virginia Retail Sales and Use Tax Regulations, transactions which solely involve the developing of films or the coloring or tinting of films are not taxable. In such cases, the photographer is rendering services that are completely independent of a sale of photographs or other tangible products.
Using the other example set forth in your letter, when a photographer shoots an image on his own (not under commission to a particular customer) and later sells a print of the image, the tax would merely be computed on the total price charged for the print. If the total price includes a charge for shooting time, it is taxable as part of the total price paid for the print. If, as in your example, a photographer sets the price of the print so as not to include a specific shooting time or labor charge, again the tax is computed on the total charge made to the customer on his invoice.
As to your last comment, with only two exceptions, there is no differentiation in the taxation of labor charges in connection with a sale of tangible property. The definition of "sales price" noted above is generally applicable to all persons who sell tangible products. The only two exceptions to this rule are services rendered by a repairman, which are exempted from the tax under Virginia Code Section 58.1-608.2, and labor or services rendered after a sale to install, apply, remodel, or repair the property sold, which charges are specifically excluded from the Virginia Code Section 58.1-602.17 definition of "sales price".
In summary, it should be remembered that the tax applies to the total charge made to a customer for the sale of a photograph or other tangible product. If a photograph, print, or other tangible product is not sold, such as when a photographer merely develops film and sells no prints, none of the charge is taxable. Thus, charges for labor and other services are not taxable in and of themselves, but become taxable when included in the price charged to a customer for a photograph or other tangible product.
I hope that this clarifies the application of the tax to labor charges, but please feel free to contact the department if further questions arise.
Sincerely,
W. H. Forst
Tax Commissioner-
Rulings of the Tax Commissioner