To begin you have to ask yourself 3 questions…
DEFINITIONS
let’s first take a look at what each of these sale tax terms means so that you can understand how it pertains to Photographers in Minnesota.
These definitions are laid out below.
👉NEXUS
So, what’s nexus? The term “nexus” is used in tax law to describe a situation in which a business has a tax presence in a particular state. A nexus is basically a connection between the taxing authority and a business that must collect or pay the tax. It’s possible to have nexus in more than one state especially if you travel to another state to shoot. So you want to be sure you understand the laws of each state you work in.
👉SOURCE
The source indicates where the sales are taxed.
- Origin-sourced sales are taxed where the seller is located, so this is based on your zip code.
- Destination-sourced sales are taxed at the location where the buyer takes possession of the item sold.
Also, keep in mind if the client picks up tangible goods from your location or studio, this is the point where the transaction happens. If you mail or ship to the client, it will be by their zip, not yours.
👉PHYSICAL GOODS
Any physical products sold to a client, items you can touch and hold like prints, albums, frames, etc…
👉DIGITAL GOODS
These are digital items delivered electronically via telephone lines, over the internet, by email, or by another alternative form of non-physical transmission.
Beware of digital prints delivered on a physical device such as a thumb drive or CD as these are no longer digital and are now considered physical because you can touch them.
Services are anything needed to produce the end product, such as shooting, editing, culling, touchup, etc…
👉SERVICES
Services are anything needed to produce the end product, such as shooting, editing, culling, touchup, etc…
👉SHIPPING
This is any shipping charged by you to your client. Third parties such as album companies who dropship or online
galleries where clients can order prints will take care of their own shipping. But if you charge your client shipping,
this is where the shipping rules in this guide apply to you.
Minnesota Sales Tax for Photographers
Below are the sales tax requirements for Photographers in Minnesota broken out. You will find supporting links and resources at the bottom of this post.
✅Minnesota Nexus
physical presence; providing service in person, having a physical location, a warehouse, inventory, traveling salespeople or representatives, attending trade shows, or taking orders or deposits in person.
✅Minnesota Source
Minnesota uses destination-based sales tax; this means the tax rate is based on the zip code of the buyer’s address or where the buyer took possession of the final goods.
✅Minnesota Physical Goods
Minnesota imposes sales tax on physical goods.
✅Minnesota Digital goods
Charges for digital photographs transferred electronically by means other than tangible storage media are not taxable in Minnesota. The invoice must clearly state that the photos are transferred electronically.
✅Minnesota Services
All charges in the production of photography are taxable in Minnesota if physical prints or goods are purchased.
Otherwise, if all goods are delivered digitally and clearly stated on the invoice, the services related to these digital items are not taxable.
✅Minnesota Shipping
Shipping charges on taxable items are taxable in Minnesota.
📆Monthly liability / Filing Frequency:
$500.01 + / Monthly
$100.01-500.00 / Quarterly
$0.00-100.00/ Annual
📆Monthly
Due last 20th of the following month
📆Quarterly
PERIOD/DUE
Q1 (JAN – MAR) / APR20
Q2 (APR – JUN) /JUL20
Q3 (JUL – SEP) / OCT20
Q4 (OCT – DEC) /JAN20*(Following year)
📆Annually
JAN-DEC / FEB5*(Following year)
✨LINKS
Minnesota Department of revenue
⭐️LookUp Rates
⭐️Minnesota Department Of Revenue – Photography & Video Productions
⭐️Minnesota Department Of Revenue – Digital Products
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