Tax Type
Retail Sales and Use Tax
Description
Photography; Creation fees
Topic
Taxability of Persons and Transactions
Date Issued
05-14-1996
May 14, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear***************
This is in response to your letter of December 20, 1995 seeking correction of a sales and use tax audit assessment on behalf of ****** (the Taxpayer).
FACTS
The Taxpayer is a photographer. An audit for the period January 1994 through July 1995 resulted in an assessment of sales and use tax for untaxed purchases, untaxed creation fees, and unremitted sales. The only issue in this case concerns the tax assessed on creation fees, i.e., charges for the photographer's time in shooting an event for the customer. The Taxpayer maintains that he called the Department of Taxation in April 1994 and was told by an employee of the department that such fees were nontaxable. For this reason, the Taxpayer requests waiver of the tax assessed on creation fees.
DETERMINATION
Virginia Regulation 630-10-82, copy enclosed, sets out the department's established policy applicable to photography businesses and provides, in part, that:
-
- The tax is applicable to the total charge to the customer for a photograph, slide, etc., including, but not limited to, charges for labor, photocomposition, setting design, photography time, and any other components of the charge, regardless of whether such components are separately stated.
The tax also applies to the total charge for aerial photographs, security photographs, audio-visual films, and similar items produced under a contractual agreement which includes design time and similar labor charges. (Emphasis added) .
- The tax is applicable to the total charge to the customer for a photograph, slide, etc., including, but not limited to, charges for labor, photocomposition, setting design, photography time, and any other components of the charge, regardless of whether such components are separately stated.
The creation fees at issue are charged in connection with the sale of photographs and are clearly subject to taxation based on the above regulation which has been in its present form since 1985. Although the Taxpayer maintains that an employee of the department said that creation fees were nontaxable, Code of Virginia § 58.1-205 places the burden of proof upon the Taxpayer to show that it should not be assessed the tax. In this case, the Taxpayer has not met its burden of proof.
Although I can appreciate the Taxpayer's circumstances, without convincing proof that the Taxpayer was misinformed, especially in light of existing regulations which clearly explain the tax application, the department does not have the authority to waive the tax at issue. Accordingly, the tax on creation fees is valid as assessed.
The Taxpayer will receive an updated Notice of Assessment for the outstanding liability. To preclude further interest charges, payment of***** should be sent to the attention of****at the department's Office of Tax Policy, P. O. Box 1880, Richmond, Virginia 23218-1880, within the next 30 days.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10714R
Rulings of the Tax Commissioner