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magicman
04-26-2009, 04:36 PM
Ok, I have two more questions.

As some may have read I am a magician. I would like to offer add ons to my show packages. One is a workshop where I teach magic tricks to the guests/audience. Do I need to collect sales tax since I bring kits for the people to use? I would charge something like $3 a head. The workshop also involves me teaching the magic tricks, so it would be that one kit is included in the $3 each.

Also, I would like to offer goodie bags for birthday parties. The would include some small magic tricks/toys and some promotional material (business card and coloring sheet with my info on it.). Would I need to charge sales tax for that? I would not sell them without a birthday party booking.

Thanks!

Steve B
04-26-2009, 05:06 PM
It will depend on your state. Where are you?

magicman
04-26-2009, 05:10 PM
I am in NY

vangogh
04-26-2009, 05:49 PM
You'll really have to check with the department of state or the department of revenue for NY. I think it's the state department.

The following is just a guess.

It sounds like you aren't selling the kits directly, but rather giving them out when someone signs up for a workshop. In that case it's the signing up for the workshop that's the sale in which case I don't believe you need to collect taxes.

However check with NY and don't trust me.

Evan
04-26-2009, 06:15 PM
One is a workshop where I teach magic tricks to the guests/audience. Do I need to collect sales tax since I bring kits for the people to use? I would charge something like $3 a head. The workshop also involves me teaching the magic tricks, so it would be that one kit is included in the $3 each.

It depends. First, your state law may require you to charge sales tax even on services. In that case, yes. Otherwise, the answer still is it depends.


If you charge $X for the workshop and the supplies are included in that fee, then no. You are providing a service. If they can keep the supplies after the workshop, some could construe that to be providing a "product" and require sales tax be withheld. Though your state law may vary.
If you charge $X for the workshop, and the supplies are sold separately (at the door) OR can be purchased to keep, then you are providing a product. Sales tax would need to be collected.


Also, I would like to offer goodie bags for birthday parties. The would include some small magic tricks/toys and some promotional material (business card and coloring sheet with my info on it.). Would I need to charge sales tax for that? I would not sell them without a birthday party booking.

No, this seems more like a gift. They aren't purchasing the "goodie bag", you are giving it to them.

magicman
04-26-2009, 06:26 PM
The goodie bags would be an add-on at so much per bag. I bring them for the parent to hand out.

I was once told that since there is promotional material included there would be no sales tax.

Evan
04-26-2009, 07:02 PM
The goodie bags would be an add-on at so much per bag. I bring them for the parent to hand out.

I was once told that since there is promotional material included there would be no sales tax.

If you are charging them for 10 bags at $3 each (for example), then you would have to charge sales tax. Throwing in a business card and other promotional materials doesn't exempt you.

magicman
04-26-2009, 08:05 PM
What if they are included in the cost of the show? Can I do something like "Platinum "Package - 45 minute show with goodie bags for up to 25 kids, $240, up to 50 kids $265"

I am asking, as I have seen that done before.

Evan
04-26-2009, 08:39 PM
Probably then sales tax would not be charged.

It's like if I were an author doing a books signing. If you purchase a book from me, then I need to collect sales tax. If I give it away, whether the cost is buried somewhere else or not, then you cannot collect sales tax (unless, of course, that services are taxable).

magicman
04-26-2009, 08:43 PM
Okay.

Either way, with the bags or not, if there was more than 25 kids, the price would go up anyway. It is a larger audience of kids to manage.

Otherwise, I can still upsell the workshop and the parents can use that as the goodie bag.

vangogh
04-27-2009, 01:36 AM
Again check with the state of NY, but I think the issue will come down to whether you're charging for the kit (a product) or the show (service). The amount of people at the show is likely irrelevant.

magicman
04-27-2009, 09:58 AM
Well, then in that case, the way I stated before, the thing they are paying for is the show, they would not be able to get the goodie bags without booking that package.

The main thing for the workshop is me teaching the tricks, they cannot get the tricks without me teaching them. There would be one or two small plastic magic tricks, and the other tricks are with rubber bands and coins.

magicman
04-30-2009, 10:58 PM
I have the workshop figured out with help from an accountant. No sales tax, the props come with the service of me teaching.

I have 2 birthday party shows, a 30 minute and 45 minute. If I have a third package that includes goodie bags and charge say, $225 for up to 15 children and $3 per additional child, would that be taxed?

Evan
04-30-2009, 11:02 PM
Magicman,

Your local accountant is a better resource than myself or anyone else on this forum. I am not familiar with the rules in New York State and can only point you there. I deal primarily with Rhode Island and Massachusetts.

vangogh
05-01-2009, 01:05 AM
I'll echo Evan and suggest your local account will be the best resource.

I'd guess you wouldn't need to add sales tax to the third package. It likely comes down to whether you're selling the service or a product. Seems like in all cases you're selling the service.

magicman
05-01-2009, 10:33 AM
I am going to run it by accountant.

I am not in business to sell goodie bags, but to perform magic. They bags and workshops are simply an upsell.

I think I could probably even just quote the customer the price for the goodie bag package based on how many children there are and never even charge for extras. They are factored into the price.

I mean, I float the birthday child in the second package. If I take a picture of the birthday child to hand the parents, would the IRS want to tax that package since the photo is tangible? It is a really insignificant thing compared to what I am in business for.

vangogh
05-01-2009, 11:36 AM
I wouldn't think you'd have to add sales tax since you really are selling the performance. You never know though. Accountant knows best in this situation

Evan
05-01-2009, 06:50 PM
I am not in business to sell goodie bags, but to perform magic. They bags and workshops are simply an upsell.
A hair stylist isn't in business to sell hair products either. It's an incidental business to the hair stylist, and in this case sales tax would need to be withheld.

If you are approached "Hey, how can I purchase a few of these bags to keep?" that is outside of your quote -- I could see those being subjected to sales tax.

The IRS doesn't deal with sales tax. It is your state that will care.

magicman
05-02-2009, 10:04 AM
Evan, I am a bit confused by your post.

"If you are approached "Hey, how can I purchase a few of these bags to keep?" that is outside of your quote -- I could see those being subjected to sales tax."

So, if they are part of the quote for the package, there is no sales tax, but if I sell just the goodie bags sales tax would need to be paid?

Evan
05-02-2009, 01:13 PM
Yes.

Let me use this in another context. Say you go to Lowe's to rent a carpet cleaner. That is not usually subject to sales tax as it's just a rental fee. But if you want to buy the carpet cleaner, or any supplies that aren't included -- those are products subject to sales tax.

magicman
05-02-2009, 06:40 PM
Okay, I understand now.

stevewalter
06-08-2009, 12:26 PM
Hello magicman, I am agree with Evan. His views are fully informative.