Are charges by caricature artists for drawings made at parties or events subject to Texas sales tax?

Subject

Caricature Artists' Charges For Drawings At Parties Or Events Are Taxable

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9307L1248E01

Plain-English Summary

This letter clarifies an earlier Comptroller letter (dated March 27, 1991) about the taxability of special event and party planning services, specifically as it applies to caricature artists.

The Comptroller explains that caricature artists create and sell tangible personal property, the same as other artists or photographers. Because of that, the charge for the caricature — the sale of that tangible personal property — is taxable, no matter whether the artist bills by the hour or figures the charge some other way.

The letter also addresses how the tax gets collected when a party or event planner is involved. A planner may give the caricature artist a resale certificate only in two situations: (1) the planner separately states a charge for the caricatures and collects tax on that charge itself, or (2) the caricatures are provided as part of a taxable admission to an amusement event on which tax is already being collected. In any other situation, the planner is treated as the consumer of the caricature artist's service and must pay the caricature artist the tax on the charges for creating the caricatures at the event or party. The letter states that caricature artists are required by law to collect sales tax from event and party planners unless the planner gives them a valid, properly completed resale certificate.

The letter closes with the standard caveat that the opinion is based on the facts presented, and that additional or different facts could change the result.

What This Means For You

If you're a caricature artist or cartoonist working events and parties. Your charges for drawing caricatures are taxable sales of tangible personal property, whether you charge a flat fee, an hourly rate, or price it some other way. You are required by law to collect sales tax from the event or party planner who hires you, unless that planner gives you a valid, properly completed resale certificate.

If you're an event or party planner who hires caricature artists. You can only give the artist a resale certificate if you are separately charging your client for the caricatures and collecting tax on that charge yourself, or if the caricatures are bundled into a taxable admission charge for an amusement event on which tax is already being collected. If neither applies, you're the consumer of the artist's service — meaning you must pay the caricature artist the sales tax on their charge.

If you're an accountant or tax professional advising either side. This letter treats caricature artists like other artists or photographers for sales tax purposes: what they produce is tangible personal property, so the transaction is taxable regardless of the pricing method (hourly vs. per-drawing vs. flat event fee). The resale-certificate analysis turns on who is ultimately collecting tax on the caricature charge from the end customer.

Q&A

Q: Are charges by caricature artists for drawings at parties taxable in Texas?
A: Yes. The letter states that caricature artists create and sell tangible personal property, the same as other artists or photographers, and the charge for that sale is taxable.

Q: Does it matter if the caricature artist charges by the hour instead of per drawing?
A: No. The letter says the charge is taxable "even if based on an hourly rate or some other manner to determine the consideration paid."

Q: Can an event or party planner give a caricature artist a resale certificate?
A: Only in two situations described in the letter: if the planner separately states a charge and collects tax on the caricatures, or if the caricatures are provided as part of a taxable admission to an amusement event on which tax is collected.

Q: What happens if the planner doesn't meet either of those conditions?
A: The letter states the planner is then the consumer, and must pay the caricature artist the tax on the charges for creating the caricatures at the event or party.

Q: Is the caricature artist required to collect the tax?
A: Yes. The letter says caricature artists are required by law to collect sales tax from event and party planners unless given a valid and properly completed resale certificate.

Q: Does this letter apply to every caricature artist's situation?
A: The letter notes it is based on the facts presented, and that additional or different facts may change the opinion — it also references and refines an earlier March 27, 1991 letter on special event and party planning services.

Original ruling text

July 12,1993

Dear *****:

It has come to my attention that our letter to you on March 27,
1991, concerning the taxability of special event and party planning
services may need clarification regarding caricature artists.

Specifically, caricature artists create and sell tangible personal
property the same as other artists or photographers. The charge
for the sale of tangible personal property is taxable even if
based on an hourly rate or some other manner to determine the
consideration paid. Enclosed is an edited letter regarding the
sales tax responsibilities of caricature artists.

Please note that party or event planners may issue a resale
certificate to the caricature artist if the planner separately
states a charge and collects tax on the caricatures or if the
caricatures are provided by the planner as part of a taxable
admission to an amusement event on which tax is collected. In
other circumstances, the planner would be the consumer and pay the
caricature artist the tax on charges for creating caricatures at
an event or party. Caricature artists are required by law to
collect sales tax from event and party planners unless given a
valid and properly completed resale certificate.

This opinion is based on the facts presented. If there are
additional or different facts, the opinion may change.

You may call me toll free at 1-800-531-5441, ext. 5-0030. The
direct line is 512/475-0030. You may also write to Tax
Administration, Comptroller of Public Accounts.

Sincerely,

David Somerville
Tax Administration Division

NOTE: Previous Accession Number 9308037L.1 and/or 9308037L