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Thread started 13 Jan 2010 (Wednesday) 10:39
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Illinois Photographers - Question for you!

 
Maddog12
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Jan 13, 2010 10:39 |  #1

I will be charging a session fee then I will be selling prints. In Illinois there is no sales tax on the session fee but there is sales tax on the prints. What sales tax do I charge my customer.

I am a little confused by the 10% rule in Illinois.

Lets say they order $100 worth of prints. The tax rate in my county is 7.50%. Is the charged sales tax to the customer $7.50 or $0.75?

If there are any Illinois photographers out there they can help me out that would be great. I will be a portrait photographer....charge session fee (collected at time of session) then sell prints.

Thank you!


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OdiN1701
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Jan 13, 2010 11:41 |  #2
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What's $100 x 7.5% (.075)?

Or to find the final amount, simply multiply by 1.075.

And you could also try this. (external link)


This is assuming that beyond the county tax there is no state or city tax that you have to have in addition to that and it is an all inclusive rate.


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Maddog12
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Jan 13, 2010 16:01 |  #3

OdiN1701 wrote in post #9385465 (external link)
What's $100 x 7.5% (.075)?

Or to find the final amount, simply multiply by 1.075.

And you could also try this. (external link)

This is assuming that beyond the county tax there is no state or city tax that you have to have in addition to that and it is an all inclusive rate.

That was kind of a rude link don't you think? Oh well whatever.

The 7.50% tax rate includes state and county taxes.

$7.50 is the tax in that example if you use the tax rate against the total of $100. However, if the 10% rule is to be used then the tax would be $0.75 which is 10% of the tax.

$100 x 7.50% = $7.50
$100 x 7.50% x 10% = $0.75

Thanks for the link now I can also balance my checkbook:rolleyes:


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Chris
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Jan 13, 2010 18:42 |  #4

I sell retail in Illinois (not photography). For a 100.00 sale it would be $7.50 in tax. In my county it is 7.75% sales tax so it would be 7.75. I don't know what you are talking about with the 10% thing.


Chris

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Maddog12
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Jan 13, 2010 20:47 |  #5

Chris wrote in post #9387991 (external link)
I sell retail in Illinois (not photography). For a 100.00 sale it would be $7.50 in tax. In my county it is 7.75% sales tax so it would be 7.75. I don't know what you are talking about with the 10% thing.

Thanks Chris. I have heard of the 10% here and there but really have not investigated it. I am charging 7.50% to customers then turning around and sending that to the State.


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Karl ­ Johnston
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Jan 13, 2010 20:52 |  #6
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Maddog12 wrote in post #9387029 (external link)
Thanks for the link now I can also balance my checkbook:rolleyes:

One up on me! :lol:


Adventurous Photographer, Writer (external link) & Wedding Photographer (external link)

  
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davecole650
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Jan 13, 2010 21:25 |  #7

The sales tax is confusing to say the least. The tax rate in IL is 8.25% as of Jan 1 so I'm not sure if 7.5% is the right one. If you are just selling prints I believe you'd charge the full sales tax amount. I would recommend checking with a CPA about the 10% rate charge, I believe it has to do with pictures included with a "Package" type of pricing, i.e. set fee for the session which includes a set amount of prints. I'm probably way off on this so take it with a grain of salt.

More info at:

http://www.revenue.sta​te.il.us/ (external link)


https://photography-on-the.net …?p=5113699&post​count=1082

  
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Maddog12
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Jan 13, 2010 23:02 |  #8

davecole650 wrote in post #9388878 (external link)
The sales tax is confusing to say the least. The tax rate in IL is 8.25% as of Jan 1 so I'm not sure if 7.5% is the right one. If you are just selling prints I believe you'd charge the full sales tax amount. I would recommend checking with a CPA about the 10% rate charge, I believe it has to do with pictures included with a "Package" type of pricing, i.e. set fee for the session which includes a set amount of prints. I'm probably way off on this so take it with a grain of salt.

More info at:

http://www.revenue.sta​te.il.us/ (external link)

Dave I think your are correct on all accounts except for the 8.25% you quoted for the state rate. I think it is still 6.25%. I searched my city on IDOR's website and the tax rate now is 7.50% which includes the 6.25% state rate along with some
county taxes etc.

Oh, and go Cards!!!!


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davecole650
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Jan 13, 2010 23:15 |  #9

Maddog12 wrote in post #9389375 (external link)
Dave I think your are correct on all accounts except for the 8.25% you quoted for the state rate. I think it is still 6.25%. I searched my city on IDOR's website and the tax rate now is 7.50% which includes the 6.25% state rate along with some
county taxes etc.

Oh, and go Cards!!!!

Sounds good, I had read a sign on a business stating a higher tax rate went into effect. Something to look into. Thanks.
EDIT:
http://www.revenue.sta​te.il.us …etins/2010/FY-2010-09.pdf (external link) - Illinois is one screwy state for taxes.


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Maddog12
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Jan 14, 2010 07:56 |  #10

davecole650 wrote in post #9389428 (external link)
Sounds good, I had read a sign on a business stating a higher tax rate went into effect. Something to look into. Thanks.
EDIT:
http://www.revenue.sta​te.il.us …etins/2010/FY-2010-09.pdf (external link) - Illinois is one screwy state for taxes.

I think it all depends on where your business is based. Sales taxes went up but I think the increase was done at the county/local level. My sales tax is broken down between: State (6.25%), County Public Safety (0.25%), and County Schools (1.00%). The school tax was the only change that happened in 1-1-10.

Illinois is just a screwy state in general when the government is involved. That's a different topic on a different forum!

My lab charges me a sales tax of 6.25%. I also believe I need to complete a IL CRT-61 (Certificate of Resale) form so my lab doesn't charge me tax since I am essentially the "agent" collecting the tax from the customer.


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RDKirk
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Jan 18, 2010 09:30 as a reply to  @ davecole650's post |  #11

Here are two specific links that explain the genesis and application of the "Illinois Photographer's 10% Rule."

http://www.appillinois​.com/html/Article.php?​x=13 (external link)
http://www.revenue.sta​te.il.us …ings/st/2003/sg​030013.PDF (external link)


TANSTAAFL--The Only Unbreakable Rule in Photography

  
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Maddog12
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Jan 19, 2010 09:40 |  #12

RDKirk wrote in post #9417526 (external link)
Here are two specific links that explain the genesis and application of the "Illinois Photographer's 10% Rule."

http://www.appillinois​.com/html/Article.php?​x=13 (external link)
http://www.revenue.sta​te.il.us …ings/st/2003/sg​030013.PDF (external link)

Thanks for the links. I should have posted them in my original post.

Here is how my process will work:

1. Do session and collect session fee of i.e. $100
2. Download and edit photos, etc
3. Sell prints to customers. I will use WHCC as my lab.

The session fee and print sales are on seperate invoices. From what I understand is the session fees are not taxable in IL. The print sales invoice just list the sizes, quantity, and the amount ($). There is no itemized charges for "photo processing". But I think the print itself is a product of "photo processing". I am starting to think I should charge a 10% tax on the total amount. So if they ordered $100 in prints then I charge $10 for tax. But if you read the APPI article then I should charge $0.75 for taxes (10% of my tax rate).

So confusing!


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RDKirk
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Jan 19, 2010 11:37 |  #13

Maddog12 wrote in post #9425174 (external link)
Thanks for the links. I should have posted them in my original post.

Here is how my process will work:

1. Do session and collect session fee of i.e. $100
2. Download and edit photos, etc
3. Sell prints to customers. I will use WHCC as my lab.

The session fee and print sales are on seperate invoices. From what I understand is the session fees are not taxable in IL. The print sales invoice just list the sizes, quantity, and the amount ($). There is no itemized charges for "photo processing". But I think the print itself is a product of "photo processing". I am starting to think I should charge a 10% tax on the total amount. So if they ordered $100 in prints then I charge $10 for tax. But if you read the APPI article then I should charge $0.75 for taxes (10% of my tax rate).

So confusing!

Go by the APPI article. Basically, the law presumes that the tangible portion of the photographic service--the print paper or the digital disk itself--has a retail price of 10% of the overall fee charged the client. So if you charge the client $100 for a print package, you calculate the sales tax on $10, which indeed would be 75 cents. Better deal than you thought, huh?

The article strongly warns against invoicing or writing price lists that break out the cost of any of the tangibles like paper, disks, or especially frames. If an auditor sees anything that looks like a "retail price" for any tangibles, he may figure you should have been charging tax for them separately.

It's also necessary for your total price to make that 10% assumption look reasonable. So you would not want a price list to show $100 for an unframed print and $500 for a framed print of the same size--that clearly shows you're selling a $400 frame.

Finally, I need to examine this carefully, but I did not see a provision for working taxes out this way on the online tax forms. This is a "special deal" for photographers, so it might be necessary for us to do it in hardcopy.


TANSTAAFL--The Only Unbreakable Rule in Photography

  
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Maddog12
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Jan 19, 2010 13:56 |  #14

RDKirk wrote in post #9425845 (external link)
Go by the APPI article. Basically, the law presumes that the tangible portion of the photographic service--the print paper or the digital disk itself--has a retail price of 10% of the overall fee charged the client. So if you charge the client $100 for a print package, you calculate the sales tax on $10, which indeed would be 75 cents. Better deal than you thought, huh?

The article strongly warns against invoicing or writing price lists that break out the cost of any of the tangibles like paper, disks, or especially frames. If an auditor sees anything that looks like a "retail price" for any tangibles, he may figure you should have been charging tax for them separately.

It's also necessary for your total price to make that 10% assumption look reasonable. So you would not want a price list to show $100 for an unframed print and $500 for a framed print of the same size--that clearly shows you're selling a $400 frame.

Finally, I need to examine this carefully, but I did not see a provision for working taxes out this way on the online tax forms. This is a "special deal" for photographers, so it might be necessary for us to do it in hardcopy.

Lets pretend here (sorry long post):

A client orders the following:

1 4x6 - $10
1 8x10 - $25
1 16x20 - $100

Total is $135. I would then charge a sales tax of $1.01 (135*10%*7.50%)?

What if a another client had the exact same order with the addition of a 16x20 framed print for $300 (comes from the lab framed and ready to hang). How would you calculate tax on that then? The total would be $435 with a sales tax of $3.26? The frame is not sold seperately therefore it is not a tangible product to be charged to full 100% tax.

Am I correct in my thinking?

Another question I thought of is how do I treat the transaction of when I buy prints for my use (i.e. family pics, etc) from the same lab?

WHCC is currently charging me a 6.25% sales tax when I purchase the prints. Once I get going with IDOR I will complete the CRT-1 Certificate of Resale that way WHCC is not charging me tax but I in turn collect the tax from the customer on what I sell them.

I think that is why I am getting confused...why do I get charged the full 100% tax (i.e. 6.25%) but if I sell the prints I charge 10% of the total?


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RDKirk
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Jan 19, 2010 15:13 as a reply to  @ Maddog12's post |  #15

What if a another client had the exact same order with the addition of a 16x20 framed print for $300 (comes from the lab framed and ready to hang). How would you calculate tax on that then? The total would be $435 with a sales tax of $3.26? The frame is not sold seperately therefore it is not a tangible product to be charged to full 100% tax.

Am I correct in my thinking?

Yes.

Another question I thought of is how do I treat the transaction of when I buy prints for my use (i.e. family pics, etc) from the same lab?

WHCC is currently charging me a 6.25% sales tax when I purchase the prints. Once I get going with IDOR I will complete the CRT-1 Certificate of Resale that way WHCC is not charging me tax but I in turn collect the tax from the customer on what I sell them.

I think that is why I am getting confused...why do I get charged the full 100% tax (i.e. 6.25%) but if I sell the prints I charge 10% of the total?

Remember that this is a retail sales tax--taxes are collected only on the final sale of a tangible product to the end customer. Anyone on the tail end of the retail sale chain should be paying the full tax on the full amount of the purchase. When you order prints from WHCC for your own personal use, that makes you a retail customer and you should pay the full tax to WHCC.

When you are a wholesale purchaser who will subsequently sell to your retail client, you do not pay the tax at all--that's what the CRT-1 is for-- but you do have to collect the tax from your client.


WHCC is selling you a product, not a service. Yes, they put labor into it, but the essential value is in the print itself. So you pay tax on the full price.

You, OTOH, are selling that same print, but the bulk of your price is for your service of photography, not for the print itself. You did the photography and the editing as a separate process from the physical creation of the print.

Looking at it another way, WHCC charged you for the print--the tangible product. What was your effort in the photography and editing? It wasn't the production of the print--WHCC did all that and charged you for it. You're charging over and above the cost of the print for your service.

But Illinois does not tax services, so that amount for your service over and above the cost of the print is not taxable.


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