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I've heard other agencies talking about being audited around sales and use tax, and I'm having trouble understanding where this truly applies. Our CPA and our tax attorney say that if our deliverables are digital, it doesn't apply. So, in the case that we take photos, design a brochure and have it printed, am I obligated to charge sales tax on the services as well as the print job? We would normally directly pass along the cost of the printer to the client which would have included sales tax. So do we have any sales tax obligation there?
Any help understanding this would be good. Our CPA and attorney seem to think we are fine, but when I heard that other agencies were being audited and owed money, I get worried that we are missing something.
We ask our vendors that would normally charge sales tax to pass it along to us without and we then tack on the sales tax after our markup. We then report the sales tax to the gov't. We do not charge sales tax on our services (intangilble).
Normally, the services part of advertising work is exempt from sales tax and you're only obligated to charge it on the tangible part of the job. The laws vary from state to state so it is important to use your local CPA as a resource. Here's a link to a quick overview of the OK sales and use tax law that may help guide you further. It's not a complete look at the law but does provide some good basic information,
I know this subject well. I am in Jacksonville FL and have been through a sales tax audit, which turned into an employment tax audit. Feel free to call me at the office and I can tell you all about the process. In Florida, if you invoice printing and design on the same invoice, it is all taxable. If you bill for color proofs, along with design, its all taxable. We separate out the tangible from the intangible. When we bill for color proofs, we say it is for internal use only. The right thing to do is the not pay sales tax on the printing, then add it to the bill. 904-398-3699 x 1. I'm happy to talk to you. I do a little public speaking on this subject.