Example 1

A manufacturer hires you to take photos of their facilities located throughout the United States. You deliver the photos to their corporate headquarters in Minnesota where they will be displayed. You must charge tax on the total selling price of the photos, including all expenses such as airfare, meals, hotel rooms, film, processing, etc. 

Example 2

A company needs product photos to display at their annual meeting. You are hired to take pictures and you send several proofs to the company for selection and approval. Some proofs are transferred electronically and some are mailed. The photos are finished and delivered to the company in Minnesota. The entire selling price of the final photos is taxable, including all charges for proofs, regardless of how the proofs were transferred to the customer.

Example 3

You rent lighting equipment to get a special effect at a photo shoot. You pass the rental fee on to the customer as a separate item on the invoice. The rental fee is part of the total selling price of the photos and is taxable. 

A bundled transaction occurs when photography products delivered in both tangible and electronic formats are combined and sold for a single price. The sale is taxable unless the price of the taxable item or service is minimal.

To be minimal, the seller’s purchase price or sales price for the taxable products must be 10% or less of their total purchase or sales price for the bundled products. 

Example 1

Your photography studio is in Minneapolis. You take photos at a wedding and reception in Duluth. The couple now lives in Saint Paul. You provide proofs to the customer on a flash drive at your studio but deliver the finished canvas and albums to the customer’s home address in Saint Paul. You send an additional album to the bride’s mother in Wisconsin. 

• The flash drive you provided at your studio is taxed at the rate in effect for Minneapolis. 
• The finished canvas and albums delivered to the couple’s home are taxed at the rate in effect for St. Paul. 
• If the mother’s album is separately stated, no Minnesota tax is due on the out-of-state delivery.

Example 2

You send a customer’s images you took to a photo processing lab. The lab prepares the prints and mails them to your customer in Rice County. You bill the customer for taking the photos and for the final prints. The entire charge is taxable at the rate in effect for Rice County. 

Photography sold to an advertising agency is taxable unless the agency provides a completed, Form ST3, Certificate of Exemption. 

Photography sold to an ad agency for its own use is taxable.

If an agency uses a photo in nontaxable advertising services such as brochures or posters, or to develop a webpage, the photo is taxable.

Photos are exempt when purchased by an agency for use in: 

• Exempt publications, such as a newspaper or magazine ad
• Designing packaging material or instructions for a product that will ultimately be sold at retail
• Specialty advertising such as mugs or calendars to be sold to clients
• Developing training manuals or videos to be sold to clients

Sometimes photography has both taxable and exempt uses. An ad agency may give a photographer an exemption certificate to show that they are using the photography for multiple purposes. The ad agency is then responsible for accruing and paying use tax on any taxable photography use. 

Stock Photography

When an ad agency contracts to use stock photography, each contract is considered separately. For example, if an ad agency contracts to use stock photography for a newspaper ad, it is exempt since the newspaper is an exempt publication. If the agency contracts to use the same photo in an advertising brochure, the charge is taxable. 

Photographer as an Ad Agency

A photographer may act as an ad agency if they work directly with the advertiser and bills the advertiser directly. The sales invoice given to the client must indicate it is for creative advertising/promotional services. 

Example

You are hired by an advertiser to produce a promotional poster. You develop the original concept and perform the entire production process of the poster. 

• You are acting as an advertising agency and are selling a nontaxable advertising service. 

You do not charge the advertiser sales tax on the service, but you must pay sales or use tax on all inputs used to produce the poster.

If you sell or lease equipment or other items that were used in your business, the sale may be taxable. See Isolated and Occasional Sales.