[Todd Terry] “Not that Bruce is wrong, but we go 180° here… we tax nothing.”
In Arizona, we have to tax “tangible” goods but there are two items in the state tax code that conflict with each other as to what “tangible” really is. And now, with internet delivery, the issue is clouded. “Tangible” means that you can hold it in your hand. After all, you can hold a computer in your hand.
Several years ago, we got a letter from a city telling us that we had to tax everything we did. Several of my associates started doing that. I instructed him to quote the law that he is using to make such a declaration. We never heard another word.
We invoice in sections because we invoice in sections on larger jobs. Normally, we invoice for all pre-production and production first and then for post. That way, we are not forced into taxing the entire job. There are some who claim that if we put everything on a single invloice and then hand the client a master tape, we need to tax the entire amount. Others disagree. However, they all agree to invoicing in sections.
Most often, if you talk to someone from your state revenue department, they will tell you to tax everything because they are too busy to really research it. Ask a CPA that is familiar with your industry.
Our advice is to thotoughly research your responsibility and obligation and do it right from the beginning. You do not want to find out five years from now that you under taxed anything or it will cost you big time.
There are on’line classes for Quickbooks for a $65 charge. Have a CPS set you up now. It will be the smartest money you ever spend. However, be advised that the IRS has special rules for the production industry.
Steve Wargo
Tempe, Arizona
It’s a dry heat!
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