How is sales tax computed and who must collect and remit it on photographs sold from coin-operated photographic booths installed in shopping malls and amusement centers?

Plain-English summary

A business that operates coin-operated photographic booths in shopping malls and amusement centers asked the Comptroller how sales tax should be computed on the photographs those booths produce, and who is responsible for collecting and remitting it.

The Comptroller answered that the total charge for the pictures is taxable. If the booth's price is tax-included, a notice reading "price includes sales tax" should be posted in or on the booth, and the tax due can be figured by dividing the taxable receipts by 100% plus the applicable sales tax rate (i.e., backing the tax out of the total instead of adding it on top).

The letter also addresses who actually collects and remits the tax: if the booth operator's agreement with the mall or amusement center allows the mall/center to collect and remit the tax instead, the operator does not have to report the tax itself. In that arrangement, the mall or amusement center issues the booth operator a resale certificate, and the mall/center becomes the party responsible for collecting and remitting the tax on the sale of the photographs.

The Comptroller noted this opinion is based on the facts presented, and could change if the facts were different.

What this means for you

Operators of coin-operated photo booths (or similar vending/amusement equipment)

The full price charged for a photograph is taxable, whether or not that price is presented as tax-included. If you price your booth as tax-included, post a "price includes sales tax" notice on the booth, and remember you can calculate the tax due by dividing total taxable receipts by 100% plus the tax rate rather than adding tax on top of a stated price.

Malls and amusement centers hosting booths or vending machines

If your agreement with a booth operator has your business — rather than the operator — collect and remit the sales tax, you should issue the operator a resale certificate, and your business (not the operator) is the one responsible for collecting and remitting the tax to the state.

Businesses structuring vendor/host agreements for coin-operated equipment

Make sure your contract clearly states which party — the equipment operator or the property owner/host — is responsible for collecting and remitting sales tax, since the Comptroller will look to that agreement (and the resale certificate, if any) to determine who owes the collection and remittance duty.

Common questions

Q: Is the full price charged by a photo booth taxable, or only part of it?
A: The total charge for the pictures is taxable.

Q: If my booth's price already includes sales tax, what do I need to do?
A: Post a statement that "price includes sales tax" in or on the booth. You can calculate the tax due by dividing the taxable receipts by 100% plus the sales tax rate.

Q: Who collects and remits the tax if my agreement lets the mall or amusement center handle it?
A: The mall or amusement center would issue you a resale certificate, and it — not you — would be required to collect and remit the tax.

Q: Can I rely on this letter for my own photo booth or vending business?
A: No. This opinion is based on the facts presented to the Comptroller, and different facts could lead to a different result.

Citations and references

No statutes or administrative rules were cited by name in this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9602L1412A03

Original ruling text

February 29, 1996

Dear ****:

In your letter of February 7, 1996, you asked how sales tax is computed on
the sale of photographs from photographic booths installed in malls and other
locations.

The total charge for the pictures is taxable. The statement "price includes
sales tax" should posted in or on the booth. For your information, sales
tax may be backed out of the total selling price by dividing the taxable
receipts by 100 % plus the sales tax rate.

If your agreement allows for someone to collect and remit the tax, then you
would not be required to report tax. The mall, amusement center, etc., would
issue you a resale certificate and they would be required to collect and
remit the tax.

This opinion is based upon 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 extension 50892. The direct
line is 512/475-0892. You may also write to Tax Policy Division,
Comptroller of Public Accounts.

Sincerely,

John J. Fitzgibbons, CPA
Tax Policy

NOTE: Previous Accession Number 9602251L