PURPOSE: Section 144.020.1(1), RSMo imposes a tax on the retail sale of tangible personal property. Section 144.030.2(2), RSMo exempts materials that become a component part or ingredient of new personal property, which is intended to be sold ultimately at retail. Sections 144.030.2(4) and (5), RSMo exempts certain machinery, equipment, parts, materials, supplies and parts that are for replacement or are for a new or expanded plant. This rule explains the taxation rules for photographers, photofinishers and photoengravers and what elements must be met to qualify for these exemptions.

1. (1) In general, sales of photographs, photoengravings, photostats, blueprints, electrotypes, stereotypes, wood engravings and similar products are subject to tax. Purchases of materials and supplies that become component parts or ingredients of the final product, such as paper, are exempt. Purchases of machinery and equipment for replacement or for a new or expanded plant are exempt if directly used in the manufacturing process. This may include cameras and lenses.
2. (2) Definition of Terms: See the definition of terms in 12 CSR 10-111.010 Machinery and Equipment Exemptions.

3. (3) Basic Application of Tax.

   1. (A) Sales of photoengravings, photostats, blueprints, electrotypes, stereotypes, wood engravings and the like, to consumers for use or consumption, whether on special order, contract or otherwise, are subject to tax.
   2. (B) Sales of finished photographs by photographers are subject to tax. Services rendered by the photographer frequently represent a substantial portion of the total charges. Fees for the photographer’s consultative and photographic services up to the point of previews are not subject to tax, if separately stated. Other charges for labor involved in creating the finished photographs are subject to tax even if separately stated. Sales by photographers are taxable because the true object of the photographers’ customers is to obtain the finished photograph produced by the service.
   3. (C) The sale of negative development services only, where no prints, slides or other tangible personal property are received, is not subject to tax. The developer must pay tax on materials and supplies used in the development process because developing is a service that is not subject to tax.
   4. (D) Photographers, photofinishers, photoengravers, blueprinters and other persons purchasing tangible personal property such as paper, which becomes a component or an ingredient part of a finished product that will ultimately be sold at retail, may purchase their supplies under a resale exemption certificate.
   5. (E) Chemicals that are intended to and do remain with the final product are considered an ingredient or component part of the final product for resale and are therefore not subject to tax.
   6. (F) Equipment such as cameras and lenses, which is directly used to manufacture new tangible personal property intended to be sold ultimately at retail, is exempt from tax. Replacement parts for this exempt equipment are also exempt.
   7. (G) A photographer who enters into an exclusive contract with an elementary or high school to photograph students is liable for tax on photographs sold to students. The sales are not exempt as sales to an exempt organization because the sales are made to the students, not to the school.

4. (4) Examples.

   1. (A) A couple arranged for a photographer to take pictures at their wedding. The photographer charged $150 to take the pictures, develop the film and print proofs. The $150 separately stated labor charge for taking the pictures and developing the proofs is not subject to tax. The couple decides to purchase $200 worth of finished pictures. The $200 for the finished pictures is subject to tax.
   2. (B) If the photographer in example (4)(A) does not separately state the labor charges the entire sale price is taxable.
   3. (C) A person went to a photographer to have glamour portraits taken. The photographer met with the person to discuss the desired results and the purpose of these photographs. The photographer advised the person on clothing to wear, makeup tips, described the setting and lighting, and other means the photographer uses. The photographer took several pictures and created proofs for the person to preview. The photographer charged a nonrefundable “sitting fee.” This sitting fee is not subject to tax because this is a distinct and separate charge from the photographs.
   4. (D) A photographer purchased new cameras and a new lens to replace a broken lens. The new cameras allow the photographer to photograph twice as many pictures. The photographer can purchase the cameras exempt because it increases productivity. The new lens would also be exempt as replacement equipment.
   5. (E) A photographer scans photographs into a computer for customers. If the photographer provides the customer a CD containing the images, the sale is taxable. However, if the photographer sends the images to customers via the Internet, the photographer has not sold tangible personal property and should not collect tax on this sale.

AUTHORITY: section 144.270, RSMo 2000.* Original rule filed June 29, 2000, effective Dec. 30, 2000. Emergency amendment filed Aug. 14, 2007, effective Aug. 28, 2007, expired Feb. 23, 2008. Amended: Filed Aug. 14, 2007, effective Feb. 29, 2008. *Original authority: 144.270, RSMo 1939, amended 1941, 1943, 1945, 1947, 1955, 1961.