We recently presented a free broadcast by Richard Streitfeld on sales tax for artists. The recording of the broadcast is now available for free download at: http://www.xanadugallery.com/ArtistSvcs/Broadcasts/SalesTax/Index.asp
During this in-depth seminar Rich will help you understand your responsibilities and liabilities as you collect sales tax, including:
* Sales Tax Overview
* Invoice Options
* Internet Sales
* Limit Your Exposure
* Sales Tax Record-Keeping
* Tax-Free Zones and (What’s The?) Use Tax
After the workshop Richard posted the following follow up on the discussion during the broadcast:
Sales Tax Clarifications
In our delightful webinar a few weeks back, a participant asked what happens when she crosses state lines and participates in a craft show. I explained that in general you only need to register out of state when you have an ongoing physical presence (“nexus”)–- for instance you have a second office or store, a sales representative, or deliver items in a company vehicle.
However, in many states even participating in a crafts fair or trade show on a one-time basis will qualify as nexus. In these cases you must register and collect the sales tax (or the show will do it for you) in order to participate. The specific rules vary; as with all things sales-taxable, each jurisdiction establishes its own regulations.
Nexus tends to not apply to casual sales in another state – if I am a Rhode Island artist and happen to sell a painting while travelling in Pennsylvania; I still pay sales tax in Rhode Island. However if I am hired to construct a glass sculpture on site in Philadelphia then I will need to register and collect sales tax on that item in Pennsylvania.
Here is another tidbit I discovered while researching one of your excellent questions: If you are selling or producing a piece for a government entity you may be able to claim additional sales tax exemptions – for example for tools — as a contractor fulfilling a “public works project” for a government entity, as is the case in Massachusetts.
Sales tax, and especially nexus, is very much in the news these days as states scramble for revenue. Most notably, several states including New York have passed laws that allow them to tax online out-of –state retailers like Amazon that have an indirect presence through resident resellers. While your business is not as big as Amazon you need to stay informed of such changes, as the evolving definition of nexus may grab you when you least expect it.
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