Does a photographer who documents customers' belongings for insurance and identification have to collect sales tax on the charge?

Plain-English summary

James P. Nastasi runs an inventory-documentation service: he photographs customers' personal possessions and household goods to give them photographic proof of ownership for insurance claims and to help identify recovered stolen property. In most cases he delivers the finished photographs to the customer, but he will keep them on file if the customer requests. He asked whether he must collect sales tax on his charges.

The Department held the charges are taxable.

• Retail sales of tangible personal property are taxed. Section 1105(a) taxes receipts from every retail sale of tangible personal property.
• A "sale" is any transfer of title or possession for consideration. Section 1101(b)(4)(i) defines a retail sale as a sale of tangible personal property, and § 1101(b)(5) defines a sale as any transfer of title or possession (or both), by any means, for consideration.
• Furnishing the photographs is a retail sale. Whether he delivers the finished photographs to the customer or retains them at the customer's request, he is making a retail sale of tangible personal property (the photographs).
• Result: under § 1105(a), State and local sales tax is due on the total charge to the customer, and the photographer must collect it.

What this means for you

Photography that produces a tangible product is a taxable sale. If your service results in photographs (or other tangible items) that you provide to the customer, you're selling tangible personal property and must collect sales tax on the charge — the informational or protective purpose of the photos doesn't exempt them.

Tax the whole charge. The Department taxed the "total charge to the customer," so don't try to carve the price into a nontaxable "service" component and a taxable "goods" component when the deliverable is the photographs.

Retaining the item for the customer doesn't change the result. Even when the photographer keeps the finished photographs on file at the customer's request, the transaction is still a taxable transfer — possession/title concepts are read broadly under § 1101(b)(5).

Common questions

Q: I'm providing a documentation service — why is it taxed like a product sale?
A: Because the deliverable is tangible personal property (the finished photographs). Section 1105(a) taxes retail sales of tangible personal property, and furnishing the photographs is such a sale.

Q: What if I keep the photographs on file instead of handing them over?
A: It's still taxable. The Department treated retaining the finished photographs at the customer's request the same as delivering them — both are a retail sale under § 1101(b)(4)-(5).

Q: Do I charge tax on my whole fee or just the materials?
A: On the whole fee. Sales tax is due on the total charge to the customer.

Citations and references

Statutes, regulations and authority:

• Tax Law § 1105(a) — imposes sales tax on receipts from every retail sale of tangible personal property
• Tax Law § 1101(b)(4)(i) — defines "retail sale" to include a sale of tangible personal property to any person
• Tax Law § 1101(b)(5) — defines "sale" as any transfer of title or possession, or both, for consideration

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/h81_101s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-H-81(101)S
Sales Tax
May 20, 1981

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S810226A

On February 26, 1981 a Petition for Advisory Opinion was received from
James P. Nastasi, 86 Chelsea Drive, Mount Sinai, New York 11766.
The issue raised is whether Petitioner is required to collect sales tax on
charges to customers for his inventory documentation service. This service
consists of photographing the personal possessions and household goods of
customers requiring photographic proof of ownership. The photographs provided
will be used by customers when making insurance claims and/or for the purpose of
identification of recovered stolen property. Petitioner will, in most cases,
deliver the photographs to his customer. However, if requested, Petitioner will
maintain possession of the photographs.
Section 1105 of the Tax Law imposes a tax upon "(a) The receipts from every
retail sale of tangible personal property...."
Section 1101(b)(4)(i) of the Tax Law defines the term "retail sales" to
include a "sale of tangible personal property to any person...." The terms "sale,
selling or purchase," are defined as "Any transfer of title or possession or both
... conditional or otherwise, in any manner or by any means whatsoever for a
consideration, or any agreement therefor, including the rendering of any service,
taxable under this article, for a consideration or any agreement therefor." Tax
Law, §1101(b)(5)
When Petitioner photographs a customer's personal possessions and household
goods and delivers the finished photographs to the customer or, at the customer's
request, retains the finished photographs in Petitioner's files, Petitioner is
considered to be making a retail sale of tangible personal property, as defined
in Section 1101(b) of the Tax Law. Accordingly, pursuant to Section 1105(a) of
the Tax Law, State and local sales taxes on the total charge to Petitioner's
customers are due, and Petitioner is required to collect such taxes.

DATED: May 6,1981

TP-8 (4/80)

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

JAMES H. TULLY, JR., COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR