Dread Sales Tax- Part 2

Well, despite Mrs. Eaves promises to continue her thoughts about artists and sales tax, Zuzu  kept distracting her until here it is the first of April and she is only now getting back to the topic. But with April 15 Tax Day fast approaching, she renews her vow to tackle the topic.

So, back to Sales Tax. When we left off Mrs. Eaves advised us that, for better or for worse, visual artists are required to collect and submit sales tax for sales of artwork in Texas. In most metropolitan areas in Texas the sales tax rate is .0825%. The good news is if you make a sale of artwork to a buyer located outside the state of Texas (and the work is delivered to that out-of-state location), you are not required to collect and submit sales tax.

Recently Mrs. Eaves attended a workshop regarding “Tax Issues for Individual Artists” as part of the City of Austin Next Level series. Andrea Belano, a staff attorney for the Texas RioGrande Legal Aid, did an excellent job presenting a concise, coherent overview of tax issues relevant to artists. Allegedly, the presentation was filmed and will be rebroadcast on a local station. If so, it would be well worth your effort to grab a bowl of popcorn and watch it in your pjs (Zuzu’s preferred method of “professional development”).  Check the City of Austin website for air dates.

Ms. Belano recommended that artists create a separate account for collected sales tax so that you are never tempted to consider that money part of your gross income. Even Zuzu’s suspect method of hiding collected sales tax from herself in a special jar is better than co-mingling the funds. As Ms. Belano reminded everyone, a buyer pays sales tax on the purchase of artwork regardless of whether you itemize it on a bill of sale or not. And the flip side is equally true—the artist is required to submit sales tax regardless of whether you charged it or not. The artist is simply the middle-man for those funds. The tax is paid by the buyer to the STATE and you, the artist, simply hold the money for a brief time on behalf of the state. It’s like you are a bank…but one who doesn’t charge any interest. Mrs. Eaves’ advice: avoid the wrath of The Comptroller and just make sales tax collection a mindless part of your business regimine.