Photography Industry Guide – Minnesota Department of Revenue

Apr 17, 2024 | Blog | 0 comments

Photography

This guide will help you determine which photography products or services are taxable.

There are different kinds of photography products and services, such as the following:

Aerial photography
Architectural photography
Event and party photos
Holiday photos
Model portfolios
Passport photos
Photo booth sales
Portraits
School photos
Sonogram imaging (non-medical)
Wedding photos

Sales

Whether a photography product or service is taxable depends on how the final product is delivered to the customer: in a tangible (physical) form or electronically.

Delivery Method

Taxable or Not Taxable

Requirements

Tangible format

Taxable

The seller must charge:

Minnesota general sales tax rate
Any applicable local taxes

Electronic format

Not taxable

The invoice must clearly show the items were delivered electronically.

Note: If the sale includes any products delivered in a tangible and an electronic format, then the entire amount billed to the customer is taxable.

Tangible Delivery Examples

Compact discs (CDs)
Flash drives
Negatives
Printed photos and proofs

Electronic Delivery Examples

Images delivered by email
Images that a customer downloads from a website

Photography Services

Altering Services

The labor charge to alter a customer’s photo into a new or changed product is taxable.

Examples include:

Red eye reduction
Resizing
Retouching
Tinting

Printing Services

Printing services are taxable.

Examples include:

Holiday greeting cards
Memorabilia with the photo
Original or duplicate photos
Posters

Restoration Services

The labor charge to restore a photograph to its original condition is not taxable. This does not include creating a replacement of the original photograph.

Taxable Sales

The sales price includes all charges necessary to create the taxable product.

The entire amount billed to the customer is taxable, even if services are separately stated because the end product could not exist without the labor and materials to create the images.

Items Included in the Sales Price

Examples of items and services included in the sales price:

Consultation
Copyright or licensing fee
Delivery charges
Editing
Models
Re-Take charges
Production labor charges
Printing
Retouching photos
Props
Sitting or session fee
Stylists
Travel expenses (including taxes paid)
Wardrobe

Note: If the customer pays for a sitting fee or other services but it does not purchase any tangible photos or proofs, then there is no taxable sale.

Sales Tax Rate

To determine the tax rate, use the location where the product is received by the customer. Local taxes may apply in addition to state tax.

Example 1: Your photography studio is in Minneapolis. You take photos at a wedding and reception in Duluth. The couple now lives in Saint Paul. You provide proofs to the customer on a flash drive at your studio, but deliver the finished canvas and albums to the customer’s home address in Saint Paul. You send an additional album to the bride’s mother in Wisconsin.

The flash drive you provided at your studio is taxed at the rate in effect for Minneapolis.
The finished canvas and albums delivered to the couple’s home are taxed at the rate in effect for St. Paul.
If the mother’s album is separately stated, no Minnesota tax is due on the out-of-state delivery.

Example 2: You’re a photographer who sends images to a photo processing lab. The lab prepares the prints and sends them to the customer in Rice County. You bill the customer for taking the photos and for the final prints. The entire charge is taxable at the rate in effect for Rice County.

Local Sales Tax

Some cities and counties have local sales and use taxes. If you are located in or make sales into an area with a local tax, you may owe local sales and use tax. For more information, see Local Sales and Use Taxes.

To determine the sales tax rate, use the location where the product is received by the customer, typically your business or a delivery address. You can use our Sales Tax Rate Map or Sales Tax Rate Calculator to help you determine the sales tax rate.

Note: The map and rate calculator do not include special local taxes.

For more information, see:

Nontaxable Sales

Exemptions

Photography sales to certain types of customers and for certain uses are not taxable.

You must charge sales tax unless the customer gives you a completed Form ST3, Certificate of Exemption. The customer must complete the following required sections on the form:

Purchaser’s name and address
Purchaser’s identification number
Type of business
Reason for exemption
Signature

Keep the completed Form ST3 in your records.

Out-of-State Sales

Photography delivered to customers outside of Minnesota is not subject to Minnesota tax. No exemption certificate is required.

You must maintain records that show the items were shipped to a customer outside of Minnesota. Tax may be due in the state where the photography was delivered

Taxable Purchases and Use Tax

Items you use to operate your photography business are taxable, unless an exemption applies. Several services are also taxable.

If you do not pay sales tax on a taxable purchase, then you owe use tax.

Taxable Purchases	Examples
General items	Camera cases or gadget cases Computer hardware and software Display samples that are not for sale Furniture and fixtures Office equipment and supplies
Photography equipment and supplies	Equipment and supplies are taxable if they are used to produce images delivered electronically. Examples include: Accessories and attachments to production equipment Camera cards, batteries, and flashbulbs Camera equipment Editing equipment and software Lighting equipment Props
Taxable services	Building Cleaning and Maintenance Detective and security services Lawn and garden maintenance For more information see Taxable Services.
Travel expenses	Travel expenses are taxable, even if you bill them to the customer. You may not purchase travel services exempt for resale. Examples include: Lodging Meals and beverages Transportation (airfare, vehicle rental, and motor vehicle fuel)

Use Tax

If you buy equipment, supplies, or other taxable items for your business and the seller does not charge Minnesota sales tax, you owe use tax on the cost of the items. If your business is located in an area with a local tax, you may also owe local use tax.

Some common situations where you may owe use tax include:

You buy taxable items or services online without paying sales tax
You withdraw an item from inventory to use (instead of selling it), donate, or give away
You buy taxable items outside of Minnesota
You buy taxable items in another Minnesota city or county with a lower (or no) local sales tax

For more information, see Use Tax for Businesses and Local Sales and Use Taxes.

Nontaxable Purchases

If you create or sell tangible (physical) products, you may purchase certain items for your business without paying tax by giving your vendor Form ST3, Certificate of Exemption.

The following purchases are not taxable:

Items you buy for resale to your customers
Materials or supplies you use to create a tangible product (industrial production)
Equipment used primarily in Minnesota to create a tangible product (capital equipment)

Note: These exemptions do not apply when images are delivered electronically, and there is no transfer of a tangible product.

Resale

Industrial Production

Capital Equipment

Purchases of capital equipment are not taxable if the equipment is used at least half of its operating time:

in Minnesota; and
to create a tangible product for retail sale

Examples of equipment that may qualify for this exemption include:

Accessories and attachments for production equipment
Backdrops
Batteries
Bulbs
Cameras
Lighting equipment
Printing equipment
Production equipment
Production computers and software
Props
Tripods

Note: Equipment is taxable if it’s used more than half of its operating time:

to produce photography that is electronically delivered to a customer; or

to provide nontaxable advertising services.

For more information about this exemption, see Capital Equipment.

Filing Returns and Record-Keeping

When filing your return, you must report all sales tax collected and use tax you owe.

Filing Returns

How to Report Sales and Use Tax

Record-Keeping

It is important to keep good records to determine the correct amount of state and local tax you owe.

Your records should include:

bills, receipts, invoices, cash-register tapes, and any other documents that support the entries in your books
exemption certificates
shipping documents
worksheets used to prepare your tax returns

For more information, see the Sales and Use Tax Business Guide.

For more detailed and specific information on Photography, you can visit at Photography Industry Guide – Minnesota Department of Revenue

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