Frisco, TX asked in Tax Law and Business Law for Texas

Q: Do I have to charge sales tax for video editing services in Texas?

If I do a video edit for a client and they provide me all the footage do I need to charge them sales tax?

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1 Lawyer Answer
James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: In Texas, not all services are subject to sales tax; however, there are specific services that do fall under taxable categories. While the state's general approach leans towards taxing tangible personal property, certain services, especially where tangible personal goods are not primarily involved, might not be taxed. Yet, there are exceptions based on the nature of the service.

For instance, services like data processing, information services, and debt collection are taxable under Texas law. Specifically, if you're offering services that include using a computer for data entry, storage, or manipulation, or if you're providing information such as financial reports or newsletters, these are considered taxable. On the other hand, services directly related to personal endeavors, which do not fall under these specified categories, might not be subject to sales tax.

The context of your service, such as video editing, falls into a nuanced area. Generally, production activities related to creating master recordings or live broadcasts intended for commercial distribution are subject to different tax rules. For such productions, certain purchases may be exempt from sales and use tax if they meet specific conditions set by the Texas Comptroller. This can include equipment and services directly used in the production process. However, typical video editing services, especially if they do not contribute to such productions, might not fall under these exemptions.

Given these details, while there's a significant focus on goods and certain specified services for sales tax, the taxability of video editing services can depend on the specific context and application of your services. It is crucial to consult with a tax professional or refer to the Texas Comptroller's guidelines to determine the specific tax implications for your video editing services. For a comprehensive understanding, you might want to look at the Texas Comptroller’s official documentation and guidelines or consult with a tax professional for advice tailored to your specific situation.

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