Iowa Governor Kim Reynolds signed Senate File 2417, an extensive state tax reform bill to improve the tax structure in Iowa. The 2018 Iowa Tax Reform Bill recognizes that the method of delivering photography and retouching services has changed and that the service may or may not result in a physical product.
This law modernizes the language of the code so that photography and retouching services are taxed consistently regardless of whether the final product is physical or electronic. This will simplify the tax on goods and services sold by photography business and equalize the taxability of physical and electronic products. Prior to July 1, 2018, sales tax was collected on photography and retouching services inconsistently depending on whether a physical product (e.g. printed photos, flash drive, or a CD) was provided in conjunction with the service.
What is Changing?
Effective July 1, 2018: photography and retouching services are taxable regardless of whether the final product is physical or electronic.
Effective January 1, 2019: digital photographs or other products delivered electronically are taxable. Photography and retouching services, physical photographs, camera repair, and other physical media continue to be subject to tax.
Examples of Sales Taxable Services
- Processing, developing and printing of film or digital photos. Reproducing documents, drawings, blueprints, or photographs.
- Effective July 1, 2018: Sitting fees, videography, enlarging, retouching, and tinting or coloring photos, if charged for, regardless of whether a physical product is provided.
- Effective January 1, 2019: Photo sharing services
Examples of Sales Taxable Goods
- Cameras, equipment rental, photobooks, frames, cards, calendars, photos or videos, software, film, and photo paper.
- Effective January 1, 2019: Digital photographs and links.
Sales Taxable Scenarios
Photographers structure the costs of their services and bill their customers in various ways. Below are examples of the products and services that a photographer may charge for and the tax treatment of those sales. Remember: the product or service is only taxed if the photographer charges their customer.
| Type of Sale | Taxable July 1, 2018 | Taxable Jan. 1, 2019 |
|---|---|---|
| Photoshoot/Sitting Fee: The taking of photographs | Yes | Yes |
| Retouching Fee: Post-photoshoot editing of photographs | Yes | Yes |
| Printed Photographs: Printed photographs by photographer | Yes | Yes |
| Online Purchase: Printed photographs purchased from a self-serve website | Yes | Yes |
| Digital Archive: Access to an online archive where photographs are hosted | No | Yes |
| Digital Slideshow: Access to a slideshow of photographs that can be downloaded by the customer | No | Yes |
What does this mean?
- Effective July 1, 2018: the photography and retouching services are taxable regardless of whether the final product is physical or electronic.
- Effective January 1, 2019: digital photographs or other products delivered electronically are taxable.