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?
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.