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Charging sales tax for corp. video production

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Marcel ValcarceCharging sales tax for corp. video production
by on Sep 20, 2005 at 7:43:11 pm

Do you charge sales tax on your corp. video production projects?

We are in CA, and do shooting, editing and post for corporate films. My acct tells me any job where I hand a client a dvd I must collect sales tax. And CA considers the entire cost of the services taxable. Only exceptions might be if we are acting as a subcontractor.

What's the conventional wisdom here?

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Charlie KingRe: Charging sales tax for corp. video production
by on Sep 20, 2005 at 10:24:01 pm

Sales taxes are very confusing and also different for all states. We had the state go after several production companies here in Nevada, several years ago. They stated that a finished tape made the services taxable. One productioin company took a van loaded with tapes to court and stated I keep teh tapes, therefore I didn't sell them a finished product which by the tax law means I only performed a service which is not taxable in Nevada. This started the procedure in Nevada of charging taxes on actual supplies which are tapes, boxes, reels, etc. the tapes are taxed on tape charge only which ranges around 10% or more above our costs. The service of recording on the tape in Nevada is not taxable since that is a service.

Not sure about California tax laws. Other than when doing work such as film transfers and animatioin work in California, I would have them ship the finished product to Nevada. That made it a sale out of state and not taxable. If I were to walk out of the facility with the tape it was taxable.


ProductionKing Video Services
Unmarked Door Productions
Flamingo Las Vegas Hotel
Las Vegas, Nevada

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David Roth WeissRe: Charging sales tax for corp. video production
by on Sep 20, 2005 at 11:23:54 pm


Are you selling the DVD, or is the DVD just the storage medium on which you have stored your work product? Therein lies the difference in California.

So, if you are in the business of selling DVDs, you charge sales tax for the delivered DVDs. However, if you are a "creative," you are actually charging the client for your creative services, not for the DVD on which your work product is stored.

Does that help??


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Marcel ValcarceRe: Charging sales tax for corp. video production
by on Sep 21, 2005 at 3:15:28 pm

Hey, thanks for chimeing in guys.

DRW: that has always been my understanding eg. it's a service so no sales tax. My bookkeeper has been speaking with a sales tax auditor who told her that CA considers the video services to be manufacturing. They likend it to someone who makes custom T-shirts and sells them, they must charge sales tax. There is an exemption for "motion picture production" but does not apply to corp video.

I was just wondering if others have heard the same...

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Rich RubaschRe: Charging sales tax for corp. video production
by on Sep 22, 2005 at 10:20:20 pm

I just went through this with my accountant. He swore post production wasn't taxable, and was similar to accounting. He hands me a stack of paper and his service isn't taxable...I am paying for his service to fill out the papers. BUT,in Wisconsin, post production services are taxable because the final product, a tape, DVD or even a web stream is considered art or creative property and is taxable. We are, in fact, creating something and giving that to the client in one or more of many different forms. An accountant is only filling out forms correctly and is not, infact, creating anything. Lawyers are in the same non-sales-tax category in Wisconisn.

However, sales tax is only charged if you are selling those services to the end user of the product. If I sell a service to another production company and they will resell my services to their client, then I don't charge sales tax. If I make 200 DVDs for a client who is then marking them up to their client and selling them, they charge the sales tax, not me. But if my services are direct to the end user of them, I do charge sales tax.

If you go to your state's Department of Revenue page and go to the business section and look for Sales Tax, try to find a PDF that lists all the categories. In that PDF do a search for the text "advertising" or "video" or "tape" etc. In Wisconsin tax law it is listed under Advertising, but includes actual production and post production services.

It is going to be a state to state basis...

Rich Rubasch
Tilt Media

Paying corporate taxes since 2001...

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Chris BabbittRe: Charging sales tax for corp. video production
by on Sep 23, 2005 at 7:14:14 pm

You need to go on the Board of Equalization's website and look up Regulation 1529 (I think I got that right). Corporate and Industrial productions fall under the "Motion Picture Production" category. The differentiation in California is with programs produced for private consumer use such as wedding videos, school plays and the like, in which the entire production is taxable. In the "Motion Picture" category, the cost of production is not taxable, but release prints (DVD copies) are. The producer is considered the consumer of materials used in production and is responsible for the sales tax on these consumables.

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foleyvideoRe: Charging sales tax for corp. video production
by on Oct 15, 2005 at 7:13:33 pm

I preface this by telling you that I run a videoproduction company in the Sunshine State.

So many grey areas on the tax matter. After a couple of lengthy (and not inexpensive) sessions with my CPA I was still confused about some of the ins and outs of Florida tax law --- but what it finally comes down to is that I charge EVERYBODY sales tax unless they are an out-of-state client or they have proof of tax exemption.

The biggest rift came up between me and some local ad agencies who didn't want to pay tax because they aren't the "end user". But when questioned closely, most of them tried to claim that their services weren't taxable either -- so NOBODY would end up paying tax. Well -- we know how Uncle Sam feels about that, don't we?

These days my rule is -- if you are in-state, you are GOING to pay tax unless you can show me written proof why you shouldn't. It's just CYA.

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Post removed.

Elizabeth PerryRe: Charging sales tax for corp. video production
by on Jun 29, 2011 at 11:55:40 am

Hi there,

I wonder if anyone could help?

I have a video production company based in CA and produced a video for a Swiss firm. Do I still charge sales tax? My vendors charge me VAT so I thought it made sense to charge tax...

Thanks in advance!

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