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US Dynamic Sales Tax Calculation

This article is relevant to US customers only.

Overview

To align with state-based regulations for Marketplace Facilitators, GotPhoto is implementing an automated sales tax process to calculate, collect, and remit state sales tax on your orders. 

This hassle-free approach went into effect for all GotPhoto photographers and their customers in March 2024. 


The Basics

In order to comply with state-based legislation for Marketplace Facilitators, GotPhoto calculates, collects, and remits sales tax on all sales made through the GotPhoto platform. We utilize a sales tax calculation engine that accounts for sales tax in all jurisdictions (including state, county, city, local, district taxes, etc.). The calculation is based on the customer's billing address.

This automatic process requires no action from you, and it will drastically simplify the tax process.

The sales tax rate for an order will be automatically calculated based on your customer’s billing address and the taxable item (i.e., physical product, digital product, shipping).

Beginning in 2025, you will receive a Form 1099-K in January reflecting your sales for the previous calendar year. You will receive it via your Stripe dashboard in GotPhoto. For more information on how to read your Form 1099-K, please see this article: Understanding Your Form 1099-K

Please note that neither GotPhoto nor its employees can provide you with tax advice. Please consult a tax advisor with any tax questions.


Webinar Recording: US Tax Compliance with GotPhoto (January 18, 2024)

  


Frequently Asked Questions

Below, you will find answers to common questions about this change.

How will digital products be taxed?

If a digital product is part of a package, sales tax is calculated depending on the purchaser's state. Usually, the highest tax rate is applied. GotPhoto will calculate this according to the law. If products are purchased à la carte, a digital product will have a digital sales tax applied, and a physical product will have a physical sales tax applied.

Will I be able to see a report of how much sales tax was charged?

Yes, reporting on the amount of sales tax calculated with each order is available in 3 places:

  • The Sales Tax Report under your account’s Statistics tab
  • The Invoices Report under your account’s Orders tab
  • The Orders Report under each job's Statistics tab.
Is GotPhoto now responsible for filing my tax return for me?

Please note that neither GotPhoto nor its employees can provide you with tax advice.

When a marketplace facilitator collects and remits tax, they are doing so under their own sales tax accounts, not their sellers', and any tax filing responsibilities that the seller has will still remain.

What happens if I get audited?

Please involve your tax advisor for any audit inquiries.

State revenue departments and comptrollers are very familiar with Marketplace Facilitators. They will not ask you for proof of GotPhoto's sales tax remittance. They may look to GotPhoto if they need any additional verification about GotPhoto's Marketplace Facilitator status. We will be ready and available to accommodate any direct inquiries from them.

Should you need help running any of the GotPhoto reports provided in your account, please reach out to our Customer Care team, and we'll be happy to assist you.

I'm located in a state that does not collect sales tax.

If you are located in a state that does not collect sales tax (Delaware, Montana, Oregon, New Hampshire), sales tax will still be charged based on your customer's location. For example, if you have a studio in Oregon, and a customer from Idaho makes a purchase, Idaho sales tax will be collected on that sale.

I am tax-exempt. How do I keep my status within GotPhoto?

This question regards tax-exempt businesses within states that collect sales tax, not businesses within states that do not collect sales tax at all.

Please email your tax exemption certificate to tax-exempt@gotphoto.com and we will notify you when the process is completed (Note: a tax-exempt reseller certificate is not considered a tax exemption certificate). Once completed, the status "Tax-exempt status: Yes" will appear on your Tax Settings tab:

Please note: Sales tax will be charged if you have not sent in your tax exemption certificate. You can still submit your certification, however taxes already charged will not be refunded.

How are tax exemptions for tribal members handled?

We are neither tax experts nor tribal legal experts, so please consult with your accountant or state directly about the applicable tax-exemption laws for sales to tribal members. We can confirm that orders delivered to a tax-exempt address at checkout will be considered tax-exempt, and sales tax will not be charged. If, for any reason, the purchaser believes sales tax was over-collected, they can always request a refund from their state.

How are tax exemptions for military personnel handled?

We are neither tax experts nor military legal experts, so please consult with your accountant or state directly about the applicable tax-exemption laws for sales to military personnel. We can confirm that orders delivered to a tax-exempt address at checkout will be considered tax-exempt and sales tax will not be charged.

Are there any changes to my GotPhoto admin area?

The Invoice Settings page and the Organization tab no longer allow you to add your sales tax rates.

Does this apply to offline orders (i.e. cash orders, purchases made on-site, etc.)?

Only payments made via the GotPhoto platform (i.e. Stripe Express) will be included in this calculation. There is one exception for manual orders ("Preorders") that are placed in the order entry:  Although GotPhoto is not obliged to collect and remit sales tax for orders where payment is processed outside the platform, we want to ensure a consistent and beneficial service for our photographers. We understand that our Order Entry feature is used to create manual orders for a variety of reasons, such as capturing a new sale manually or simply reprinting an existing order. Therefore, we will give you the choice of either generating an invoice or not when manually creating an order through GotPhoto once we introduce the dynamic sales tax calculation and remittance:

  • If an invoice is generated, we will view this as a new sale for which we are providing an invoice service. We will then calculate, collect, and remit sales tax for these orders for you. Since payment was made outside the platform, you will be invoiced for the sales tax amount at the end of the month.
  • If an invoice is not generated, we will not view this as a new sale and we will not calculate, collect, and remit sales tax. You will be responsible for any sales tax obligations for these orders, should they exist. You can find more detailed information here.
Will my customers experience any significant changes?

No, the end-customer experience in the shop will not change since these changes are happening behind the scenes. On their invoice, we will still show them the total sales tax that has been applied.

How is sales tax calculated for batch shipping orders?

For batch shipping orders, the customer's billing address is used to calculate the sales tax.

Will my customers continue to see sales taxes calculated at checkout?

Yes, your customers will continue to see sales taxes calculated at checkout. Since November 2023, your customers have been required to enter their addresses before completing a purchase. The address entered will now be used to calculate the sales taxes.

How are my prices displayed in my shop?

Your shop displays net prices.

What happens if I decide to leave GotPhoto?

Your account will need to remain open to receive your form 1099-K the following January. You do not need to use your account during this time, but we cannot deactivate it. You may downgrade to a free plan during this time.


The Takeaway

Simplify your tax compliance with GotPhoto's automated sales tax process. We now handle the calculation, collection, and remittance of state sales tax on your behalf, making the process seamless for both you and your customers. Stay informed with access to detailed reports, and prepare for tax season with ease.

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