SALES TAX APPLICATION TO PHOTOGRAPHY AND VIDEO SERVICES


INFORMATION BULLETIN #34

SALES TAX

NOVEMBER 2011

(Replaces Bulletin #34 dated April 1983)

DISCLAIMER: Information bulletins are intended to provide nontechnical assistance to
the general public. Every attempt is made to provide information that is
consistent with the appropriate statutes, rules, and court decisions. Any
information, which is not consistent with the law, regulations, or court
decisions, is not binding on either the Department or the taxpayer.
Therefore, the information provided herein should serve only as a
foundation for further investigation and study of the current law and
procedures related to the subject matter covered herein.

SUBJECT: SALES TAX APPLICATION TO PHOTOGRAPHY AND VIDEO
SERVICES

REFERENCES: IC 6-2.5-1-1; IC 6-2.5-1-16.2, IC 6-2.5-1-16.3, IC 6-2.5-1-16.4; IC 6-2.5-
1-26.5; IC 6-2.5-1-28.5; IC 6-2.5-1-2; IC 6-2.5-2-1; IC 6-2.5-2-2; IC 6-
2.5-4-1; IC 6-2.5-5-3; IC 6-2.5-5-8; IC 6-2.5-5-16; IC 6-2.5-5-24; IC 6-
2.5-5-25; 45 IAC 2.2-4-2; Streamlined Sales and Use Tax Agreement
(Sept. 20, 2009)

OVERVIEW

In general, photography, videos, and related services are not retail transactions subject to sales or
use tax in Indiana. However, when a product is transferred as a part of photography or video
services, the property, including any labor charges necessary to create the product, may be
subject to sales tax depending on the nature of the transaction and the value attributed to both the
service and the property transferred.

I. Definitions

A “photograph” is a still image that is printed or captured on some form of physical medium
including, but not limited to, film, paper, slides, negatives, computer hard drive, CD, DVD,
removable disk, or flash memory device.

“Photography” refers to the act of creating a photograph.

A “video” is the recording of a sequence of related still images that, when shown in succession,
impart an impression of motion, together with accompanying sounds, if any, and that are Information Bulletin #34
Page 2

captured on some form of physical medium including, but not limited to, film, computer hard
drive, DVD, removable disk, or flash memory device.

“Video service” refers to the act of creating a video.

“Specified digital products” means electronically transferred digital audio works, digital
audiovisual works, or digital books.

“Digital audio works” means works that result from the fixation of a series of musical, spoken,
or other sounds, including ringtones.

“Digital audiovisual works” means a series of related images that, when shown in succession,
impart an impression of motion, together with accompanying sounds, if any.

“Transferred electronically” means obtained by a purchaser by means other than tangible
storage media.

“Tangible personal property” means personal property that can be seen, weighed, measured,
felt, or touched or that is in any other manner perceptible to the senses. The term includes
electricity, water, gas, steam, and prewritten computer software.

II. Application of Sales Tax to Sales of Photographs, Videos, and Related Products

In general, sales tax is imposed on all retail transactions made in Indiana. A retail transaction
occurs when a person engages in selling at retail. A person engages in selling at retail when, in
the ordinary course of his regularly conducted trade or business, he acquires tangible personal
property for the purpose of resale and transfers that property to another person for consideration.
When a product is transferred as part of photography or video services, the product, including
any labor charges necessary to create it, may be subject to sales tax depending on the nature of
the transaction and the value attributed to both the service and the property transferred.

A. Nontaxable Sales

Photography and Video Services

The Department’s regulation found at 45 IAC 2.2-4-2(a) provides that “[w]here, in conjunction
with rendering professional services, personal services, or other services, the [serviceperson] also
transfers tangible personal property for a consideration, this will constitute a transaction of a
retail merchant constituting selling at retail unless:
(1) The [serviceperson] is in an occupation which primarily furnishes and sells services,
as distinguished from tangible personal property;
(2) The tangible personal property purchased is used or consumed as a necessary incident
to the service;
(3) The price charged for tangible personal property is inconsequential (not to exceed
10%) compared with the service charge; and Information Bulletin #34
Page 3

(4) The [serviceperson] pays gross retail tax or use tax upon the tangible personal
property at the time of acquisition.”

In the context of photography or video services, such as those associated with a birthday,
graduation, or wedding event, if the charge for the photographs or videos (or other tangible
personal property) does not exceed 10% of the total service or labor charges, there is no retail
transaction and, accordingly, sales tax does not apply to the transaction.

Example: Photographer charges Customer $1,000 to photograph and film
Customer’s wedding. The invoice indicates that Photographer’s total
charge is comprised of $900 for the work of photographing and filming
the wedding and $100 for the photographs and video transferred to
Customer. The transaction is not subject to sales tax, provided that
Photographer pays sales or use tax on the tangible personal property that is
transferred.

Products Transferred Electronically

In pertinent part, sales and use tax is imposed on products transferred electronically only if the
products meet the definition of specified digital products. Products transferred electronically
mean products that are obtained by a purchaser by means other than tangible storage media.
Specified digital products currently include only digital audio works (e.g., songs, spoken-word
recordings, or ringtones), digital audiovisual works (e.g., movies), and digital books.

In the context of photography or video services, because photos are not included in the definition
of specified digital products, charges for photos transferred to a customer electronically (e.g., via
the Internet or e-mail) are not subject to sales or use tax. NOTE: Because videos are included in
the definition of specified digital products, charges for videos are subject to sales tax even when
transferred electronically.

Example: Photographer digitizes Customer’s photographs and places them on a flash
drive. Charges for the photographs are subject to sales tax because the
photographs are in tangible form.

Example: Photographer digitizes Customer’s photographs and sends them to
Customer via e-mail. Charges for the photographs are not subject to sales
tax because the photographs are transferred electronically but do not
represent taxable specified digital products.

Example: Photographer digitizes Customer’s videos and sends them to Customer via
e-mail. Charges for the videos are subject to sales tax because the videos
represent taxable specified digital products.

For more information related to the application of sales and use tax to products transferred
electronically, please refer to Commissioner’s Directive #41, available online at
http://www.in.gov/dor/3617.htm Information Bulletin #34
Page 4


Other Exempt Transactions

Some transactions ordinarily subject to sales and use tax are exempt based on the nature of the
transaction or the identity of the purchaser. For instance, purchases for resale are exempt in
Indiana. Additionally, an exemption is available from sales and use tax for certain purchases
made by federal, state, and local government entities, as well as nonprofit entities. To claim an
available exemption, the exempt entity must present the retail merchant with a Form ST-105,
available online at http://www.in.gov/dor/3504.htm

B. Taxable Sales of Tangible Personal Property

Despite operating as a service provider for some transactions, photographers also can engage in
retail transactions. For instance, if charges for tangible personal property transferred to a
customer exceed 10% of the total service or labor charge for a transaction, then the transaction is
a retail transaction and any tangible personal property transferred is subject to sales tax. NOTE:
If charges for nontaxable services are not segregated from charges for taxable tangible personal
property, the entire invoiced amount is subject to sales tax.

Example: Photographer charges Customer $1,000 to photograph and film
Customer’s wedding. The invoice indicates that Photographer’s total
charge is comprised of $850 for the work of photographing and filming
the wedding and $150 for a wedding album, photographs, and video
transferred to Customer. The charge for the wedding album, photographs,
and video transferred to Customer ($150) is subject to sales tax.

Additionally, when tangible personal property is sold as the true object of a transaction and not
merely consumed as a necessary incident to a service, the transaction is subject to sales tax.
Included in the amount subject to sales tax are charges for fabrication, which include labor to
create or produce a new product, such as photographs, prints, slides, or proofs. Common
examples of fabrication labor subject to sales tax include, but are not limited to, the following:

• Mounting photographs or slides
• Matting and framing services
• Matte or luster spraying photos
• Making enlargement from prints, slides, or negatives
• Printing on customer-furnished paper
• Coloring or tinting new photos
• Retouching negatives
• Cropping photographs
• Creating slides or prints from digital images
• Digitizing images and placing them on digital storage media, such as CDs, diskettes,
flash memory devices, or DVDs
• Scanning prints or slides and saving them on digital storage media
• Making prints or slides from digital images provided by customers Information Bulletin #34
Page 5

• Converting a customer’s film or videotape to CD or DVD
• Editing (including cropping, retouching, other otherwise modifying) a digital image as
part of transferring the image to a storage medium
• Renting a camera, computer, or other equipment
• Renting or construtcting props
• Studio overhead
• Shipping and delivery charges

III. Purchases of a Merchant Engaged in Photography and Video Services

To the extent that a retail merchant directly uses machinery, tools, and equipment to produce,
manufacture, fabricate, assemble, process, or finish other tangible personal property, transactions
involving the purchase of such items are exempt from sales tax. In the context of photography or
video services, the exemption does not apply to purchases of items used as part of a nontaxable
service. If an item is used in both a taxable and nontaxable manner, sales tax will apply to the
purchase of the item in the same proportion that the item is used in a nontaxable manner.

Example: Photographer purchases a camera for $500 used exclusively to photograph
weddings. Photographer does not charge sales tax on his photos of
weddings because charges for the tangible personal property, i.e., the
photographs, transferred to his customers never exceed 10% of the total
service or labor charges. Photographer must pay sales tax on the full
amount of the camera when purchased.

Example: Photographer purchases a computer for $1,000 and uses it 50% of the time
to process wedding photographs as part of his wedding service package
and 50% of the time to digitize its customer’s images and place them on
CDs. Photographer does not charge sales tax on his photos of weddings
because charges for the tangible personal property, i.e., the photographs,
transferred to his customers never exceed 10% of the total service or labor
charges. Photographer must pay sales tax on the full amount of the
computer when purchased but may file a subsequent claim for refund with
the Department for 50% of the total amount paid for the computer..

For more information related to sales or purchases made by merchants engaged in photography
or video services, please contact the Department of Revenue, Tax Policy Division, at (317) 232-
7282.

 John Eckart
Commissioner 


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