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Re: California State Sales Tax Question

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Thomas Hughes
Re: California State Sales Tax Question
on Dec 4, 2013 at 11:01:08 pm

Thank you for the input everyone. I asked a CPA and here's what she said:

CPA:

I did some research and found that digital images are NOT subject to sales tax in California.

HOWEVER and this is VERY important - don't give them a CD or DVD with their pictures on it.

According to the state, "Your sale of electronic data products such as software, data, digital books (eBooks), mobile applications, and digital images is generally not taxable when you transmit the data to your customer over the Internet or by modem. However, if as part of the sale you provide your customer with a printed copy of the electronically transferred information or a backup data copy on a physical storage medium such as a CD-ROM, your entire sale is usually taxable."

Thomas H:

Thank you. Do you think it's the same for video? It's still a digital file, so perhaps yes.

CPA:

Yes, if it's loaded digitally - but no backup DVD

If you ever provide them with the DVD, then the entire sale is taxable

So, in 6 months, if they come back and need a DVD don't forget to charge them the sales tax!

Thomas H:

Oh, now you raise another nuance. Do we need to tell them that we will not keep an archive? Or perhaps we can keep the archive copy but alert them that if they contact us to order a copy of it, we'll have to charge full sales tax on the entire job? Hmmm... what if someone else orders a copy of it?

CPA:

If someone orders the archive, you charge them sales tax on the amount of sale for the DVD. You don't have to go back and charge sales tax on the entire job.

Thomas H


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