Digital photographs

Washington State law generally treats digital photographs and tangible photographs (i.e., prints or photo files delivered on CD) in the same manner for tax purposes.

Digital photographs are considered digital goods when transferred electronically. "Digital goods" means sounds, images, data, facts, or information, or any combination thereof, transferred electronically. Sales of digital photographs are subject to Retailing B&O tax and retail sales tax.

"Electronically transferred" or "transferred electronically" means obtained by the purchaser by means other than tangible storage media. RCW 82.04.192. Therefore photo files delivered on CDs, USB drives or other tangible media are not digital goods.

Royalties and digital photographs

The granting of specific intangible rights to use a photo is not a sale of digital goods subject to retail sales tax, even when the photo is transferred to the buyer electronically. The method of delivery – whether tangible (i.e., print or CD) or electronic – does not determine the taxability of the transaction.

See “Licensing of Photographs” in this guide for more information.

Digital goods used solely for business purposes

RCW 82.08.02087 provides a sales tax exemption for digital goods used solely for business purposes. A photographer is not required to collect sales tax from their customer when each of the following is true:

1. The customer is a business, and
2. The customer will use the photo solely for business purposes, and
3. The photo is delivered electronically, and
4. The customer provides the seller with a completed Digital Products and Remote Access Software Exemption Certificate

"Business purposes" means any purpose relevant to the business needs of the taxpayer claiming an exemption under this section. Business purposes do not include any personal, family, or household purpose. Note that government agencies, whether state, local or federal, are not considered “businesses” for purposes of this exemption.

Note: When a photographer is licensing their digital photograph to the customer and reporting their income under the Royalties B&O tax classification, they are not required to obtain an exemption certificate from the customer. In this case it is the invoice or contract between the photographer and customer that establishes the Royalties nature of the transaction, and sales tax does not need to be collected on Royalties transactions. See “Licensing of Photographs” for more information.