This article is relevant to US customers only.
Table of contents
Overview
To comply with Marketplace Facilitator laws, GotPhoto calculates, collects, and remits state sales tax. This process began for all US photographers and their customers in March 2024. Learn more about the impact on manual orders created through the Order Entry page.
The Basics
GotPhoto’s automatic tax engine calculates sales tax based on your customer’s billing address and the nature of the item (digital, physical, or shipping). The tax engine supports state, county, and local jurisdictions.
This automated process requires no action from you and significantly simplifies compliance.
GotPhoto service fees are applied to the gross order total, including sales tax.
Each year, in January, you’ll receive a Form 1099-K summarizing the prior year’s earnings. This form will be available in your Stripe dashboard. You can read GotPhoto’s 1099-K FAQ or visit the IRS guide to Form 1099-K.
Note: GotPhoto cannot offer tax advice. Please consult a licensed tax professional.
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Frequently Asked Questions
What is a marketplace facilitator?
GotPhoto acts as your marketplace facilitator. Our platform hosts your shop, where you, as the seller, make marketplace sales directly to your customers - similar to how Etsy or Amazon host online stores for artists and small businesses. We collect order payments and taxes before transferring the earnings to you via your Stripe Express account. Learn more here: GotPhoto: Your Marketplace Facilitator
How will digital products be taxed? What if my state does not charge for digital products/downloads?
We use an automated tax engine to calculate sales tax for orders based on your customer’s billing address and the types of products purchased. The tax engine differentiates between digital and physical products.
In your state, sales tax is not applied to digital items, while physical items are taxed when ordered à la carte.
When selling packages that include both downloads and prints, the product with the highest applicable sales tax typically determines the tax rate for the entire package. Because sales tax is calculated using the customer’s billing address, the applicable rate may vary depending on whether the customer is located within your jurisdiction or in a different location.
Can I view reports on collected sales tax?
- Sales Tax Report in the Statistics tab
- Invoices Report under the Orders tab
- Orders Report in each job’s Statistics tab
Does GotPhoto file my tax return?
No. We do NOT pay your business tax for you. GotPhoto remits taxes under its own account. We are legally required as a marketplace facilitator to collect, remit, and calculate those sales taxes on all marketplace sales under our own corporate tax ID. You’re still responsible for filing your business's tax return.
If GotPhoto is not paying my taxes, how do I report my taxes for my business?
Your 1099-K form will be available for download from your Stripe Express dashboard no later than January 31.
The form includes all sales taxes that were collected and remitted by GotPhoto for each state in which you made sales during the year. After downloading your 1099-K, you can generate and download your Order Reconciliation and Sales Tax reports directly from GotPhoto. These reports can be shared with your tax advisor or tax agency for review.
To find these reports, open your dashboard and select Statistics from the left-hand navigation. There, you’ll find separate tabs for Order Reconciliation and Sales Tax.
What if I’m audited?
Please consult your tax advisor. Revenue departments are familiar with Marketplace Facilitators. GotPhoto will respond to official inquiries as needed.
I'm in a no-sales-tax state. Will tax still be collected?
Yes, if your customer resides in a taxable state. The tax is based on the buyer’s billing address.
I am tax-exempt. What should I do?
Email your tax exemption certificate to tax-exempt@gotphoto.com. Once approved, “Tax-exempt status: Yes” will appear in your Tax Settings tab.
Note: Reseller certificates do not qualify. Previously charged taxes will not be refunded.
How are tribal/military tax exemptions handled?
We recommend consulting your accountant or state office. Orders delivered to tax-exempt addresses will not incur sales tax.
How do I know what applies to me if every state is different for its taxes and their reporting?
In addition to sales tax rates, each state has its own reporting requirements. GotPhoto is not a tax advisory service, so we always recommend consulting a qualified tax professional. They are best equipped to advise you on your local filing requirements and the regulations surrounding marketplace sales.
At the bottom of our marketplace facilitator article, you’ll find a list of links to state-specific regulations. Some states provide more detailed guidance than others, so you may need to do a small amount of additional research.
What happens if sales tax is calculated incorrectly on my orders? Could this cause issues with the IRS or my state?
We use an automated tax engine to calculate sales tax based on your customer’s billing address and the types of products purchased. Taxes are calculated in accordance with applicable state, county, and local laws and are remitted under GotPhoto’s business tax ID in all jurisdictions. This means that if a tax calculation error ever occurs on an order, GotPhoto -not you - would be responsible for it.
What if an unpaid order had sales tax?
Use the cancel button on the order page. GotPhoto will refund the collected tax to you with your next invoice. It will be calculated into the Collected sales tax section (“Sales tax liability”), and the amount will be adjusted accordingly.
Do these changes apply to offline or cash (paper) orders that were paid outside of GotPhoto? How does Order Entry handle sales tax?
The Order Entry tab is used to create manual orders. These are typically paper orders collected outside of GotPhoto and then recreated in the system as needed. GotPhoto cannot collect sales tax directly from customers on manual orders. Sales tax collection is only supported for orders placed through your online shop.
However, If you would like GotPhoto to collect and remit sales tax in the same way as an online shop order, select Generate invoice when submitting the order. In this case, you are responsible for collecting both the order payment and any applicable sales tax from your customer in advance, as these amounts will be included on your monthly photo invoice.
If you prefer to handle sales tax collection and remittance under your own business tax ID, select No invoice when submitting the order. You will then need to report and file these orders as you normally would during tax season. You can review the invoice settings for the order entry in this article.
Will customers see tax changes at checkout?
No significant change. Customers already enter addresses pre-checkout, and tax is shown based on that input.
How is tax handled on batch shipping orders?
Tax is based on each customer’s billing address.
What if I leave GotPhoto?
You must keep your account open to access your 1099-K. You may downgrade to a free plan if needed.
The takeaway
GotPhoto simplifies US tax compliance by automatically handling sales tax on your behalf. Stay focused on photography while we manage the tax details behind the scenes. For any questions, reach out to your tax advisor or our Customer Care team.
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