[Tom Edgerton]

Please, everyone, get this clarified immediately where you live. The consequences of not collecting sales tax when applicable are dire indeed. Get your information from the state and local tax offices--your accountants may or may not know the law thoroughly when it comes to artwork.

Here in NC, the law is clear. Artworks, including portraits, are tangible products and not a service. You cannot parse out the labor from the materials just because that seems logical to you.

I had a friend in the 80's here who ran a successful illustration shop with several employees, who didn't charge sales tax. He was audited by the state tax guys, had to pay all uncollected back taxes--with huge penalties--at one time, and it very nearly put him out of business. He had to lay off everyone, and move the business to his home to even survive as a single practitioner. Other illustrator colleagues at the time used to tell me, "I never charge sales tax!" and they were proud of it.

It's totally beside the point whether you think you should have to collect sales taxes or not, and the state auditors won't care if you didn't know. Find out what you're supposed to do and do it. It's a pure disaster waiting to happen if you don't.

Sincerely--TE