Sales to Advertising Agencies

Photography sold to an advertising agency is taxable unless the agency provides a completed Form ST3, Certificate of Exemption.

Photography sold to an ad agency for its own use is taxable.

If an agency uses a photo in nontaxable advertising services such as brochures or posters, or to develop a webpage, the photo is taxable.

Photos are exempt when purchased by an agency for use in: 

• Exempt publications, such as a newspaper or magazine ad
• Designing packaging material or instructions for a product that will ultimately be sold at retail
• Specialty advertising such as mugs or calendars to be sold to clients
• Developing training manuals or videos to be sold to clients

Sometimes photography has both taxable and exempt uses. An ad agency may give a photographer an exemption certificate to show that they are using the photography for multiple purposes. The ad agency is then responsible for accruing and paying use tax on any taxable photography use. 

Stock Photography

When an ad agency contracts to use stock photography, each contract is considered separately. For example, if an ad agency contracts to use stock photography for a newspaper ad, it is exempt since the newspaper is an exempt publication. If the agency contracts to use the same photo in an advertising brochure, the charge is taxable. 

Photographer as an Ad Agency

A photographer may act as an ad agency if they work directly with the advertiser and bills the advertiser directly. The sales invoice given to the client must indicate it is for creative advertising/promotional services. 

Example

You are hired by an advertiser to produce a promotional poster. You develop the original concept and perform the entire production process of the poster. 

• You are acting as an advertising agency and are selling a nontaxable advertising service.
• You do not charge the advertiser sales tax on the service, but you must pay sales or use tax on all inputs used to produce the poster.