Book Authors and Sales Tax
By Natalie Bright
Members of the Texas High Plains Writers enjoyed an informative talk by accountant Dan Brown with ———at the May meeting in Amarillo.
One of the questions that we talked about, which we didn’t have time to fully discuss, involved collecting and paying sales tax for your book sales. Below I’ve listed a few blogs and websites with great information which will help clarify this very confusing issue.
Ø Note that if you’re selling your self-published book through a dealer at a trade show, or an Internet retail entity such as Amazon.com or bn.com or a publishing service acting as a retail entity (such as Blurb or Lulu.com), the retail entity making the sale is responsible for collecting sales tax. “Sales Tax Facts for Book Authors” at publishing.about.com
Ø You may think that you are paying the appropriate sales tax because you pay the tax to the printing company when you purchase the book. But that tax is only for your purchase price, not the actual selling price. So unless you sell the book at your cost, you will have a sales tax obligation. “Sales Tax Responsibility for Authors” at writeyourlife.net
Ø Reimbursement for books sold through Amazon is considered a royalty and is not subject to sales tax. However, if you sell books through your website, at a book signing, or after a public speaking engagement, sales tax should be included if those books are sold within your state. “Sales Tax Responsibility for Authors” at writeyourlife.net
Ø There are exceptions: 1. selling to someone other than the end user. Generally, states only tax sales on the final user, so if you are selling your books to a bookstore or retail store for resale, you do not charge them sales tax. [NOTE: Most retail outlets expect the ability to add a 50-60% markup above your price. If you quote them a price too high, they may not be able to carry your book in their store.]
2. Selling to a nonprofit organization. In some states, nonprofit organizations are able to obtain sales tax exemption. These organizations should provide you a copy of their sales tax exemption certificate from their state.
3. Selling to out-of-state customers. Usually, you must collect sales tax from customers that live in your state.
Ø The best thing about publishing your own book through Amazon Author Central is that you are not the seller of record. This means you are not responsible for collecting the sales tax on the books you publish. Blog.taxjar.com
Ø Nexus is having a presence in the state which indicates which state you should be submitting sales tax to. Your “nexus” is the state in which you reside and do your business, however every state is different.
Ø Let’s say you’re selling your own book and you spend the summer selling your book at festivals across five states. Some states consider making a single sale in the state to create sales tax “nexus”, while others do not. Many festivals, book stores, etc. will have a bookseller on hand to sell your books for you. This generally includes collecting the sales tax. In that case, you would be off the hook for collecting sales tax. blog.taxjar.com
Being an indie book author these days can be daunting, but take a deep breath and consider the big picture. The opportunities for reaching readers today is truly amazing. Take off your creative cap and slip into your owner/entrepreneur mode.
Here’s a few more things to consider:
- · If there is a hosting retail store at the book festival you have a booth at, absolutely take advantage of their ability to handle your books for sale. Be aware that they probably have a zillion things to do for the event. You can be persistent yet professional, but make absolutely sure your books have been ordered. I know of authors who have shown up to events to find they have no books to sign because the order was never placed. Do you leave or should you stay and hand out swag? It’s a horrible situation.
- · Every state is different. In Oklahoma for example, a representative of the Oklahoma state taxing authority might collect tax there at the book festival. A form will be provided for you to complete and sign.
- · I sell books at my cost to clubs and organizations because I figure it’s the least I can do after they’ve fed me, paid a speakers fee, and then sat through my talk. I consider the invitation to be a great opportunity to build connections with readers. This kind of networking is invaluable, plus I don’t have to collect sales tax.
- · Seek out sponsorships for your books. There might be nonprofit organizations that will purchase a case of books for special events. Suggest that your book would make a great table decoration with one at each place setting. Ask for a copy of their tax exemption certificate and attach it to the invoice that you’ve prepared for them.
I hope this helps you. Business is done. Go write now, y’all!