Kentucky Sales Tax
I am legally required to collect sales tax on all sales of tangible goods, but not services or tangible goods provided as a part of initial services. For example, a photo session is a service and if the original service includes a good such as a USB, then it isn't taxable. If however, the client returns for additional tangible prints or products, then that is taxable at Kentucky's rate of 6% sales tax. This was according to a representative at KY Department of Revenue and any of the information herein may change, so please contact KYDoR for your own clarifications.
Via Kentucky Department of Revenue "KENTUCKY SALES TAX FACTS":
Photographers are primarily engaged in the business of rendering a professional service in the taking, developing and printing of an original photograph. The photographer is thus the consumer of the tangible personal property which is used in the performance of this professional service and the tax will apply at the time of the sale of such material to the photographer. However, when making additional physical prints or digital photographs, the photographer is producing and selling tangible personal property or digital property and the tax applies to the selling price of the pictures. Th e tax does not apply to sales of materials to the photographer which become an ingredient or component part of the pictures to be sold. See Kentucky Regulation 103 KAR 27:120 for further information at http://www.lrc.ky.gov/kar/103/027/120.htm.
Photo Booth Rentals
With traditional photography, if a photographer performs photography services at a special event, where the essence of the transaction is the professional services rendered by the photographer producing original prints, the charges are not subject to sales tax pursuant to Kentucky Regulation 103 KAR 27:120. With a professional photographer only the charges for reprints are treated as retail sales of tangible personal property. However, charges for the use of a photo booth for a special event such as a wedding, reunion, or reception may constitute gross receipts from a lease or rental of tangible personal property subject to sales tax as provided in Kentucky Regulation 103 KAR 28:051. The taxability depends upon the nature of the transaction. When the charges constitute the rental of tangible personal property as with a photo booth without the need for an operator or photographer, then the rental charges would be subject to the 6% sales tax.
103 KAR 27:120. Photographers, photo finishers and x-ray labs.
RELATES TO: KRS 139.110, 139.120, 139.190. STATUTORY AUTHORITY: KRS Chapter 13A
NECESSITY, FUNCTION, AND CONFORMITY: To interpret the sales and use tax law as it applies to photographers, photo finishers and x-ray laboratories.
Section 1. Photographers. (1) Photographers are primarily engaged in the business of rendering a professional service in the taking, development and printing of an original photograph. The photographer is thus the consumer of the tangible personal property which he uses in the performance of this professional service and the tax will apply at the time of the sale of such material to him.
(2) In making additional prints, however, the photographer is producing and selling tangible personal property and the tax applies to the selling price of the prints. The tax does not apply to sales of materials to the photographer which become an ingredient or component part of the prints to be sold.
Section 2. Photo Finishers. (1) The tax applies to charges for printing pictures or making enlargements from negatives furnished by the customer but not to charges for developing the negatives if such charges are separately stated. Tax does not apply to charges for tinting or coloring pictures furnished to the finisher by the customer.
(2) Tax applies to sales to photo finishers of all tangible personal property used by them in developing negatives, finishing pictures, and coloring or tinting pictures furnished by customers, except sensitized paper upon which the prints are made, and frames and mounts sold along with the finished pictures.
Section 3. X-Ray Laboratories. (1) Producers of x-ray film for the purpose of diagnosis are the consumers of materials and supplies used in the production thereof. Thus, the tax applies to the sale of such materials and supplies to laboratories producing x-ray film for the purpose of diagnosis.
(2) Whether the laboratory is a "lay laboratory" or is operated by a physician, surgeon, dentist, or hospital is immaterial. (SU-75-1; 1 Ky.R, 230; eff. 1-8-75.)