[Tom Edgerton]

I had a friend who, as a commercial illustrator, was successfully challenged (he had to pay fees and penalties) by a model whose pose he used in an illustration for a poster, and who recognized this use solely by the position of her hands--he had put an entirely different head on the pose!

John, I'm surprised here in NC that anyone has advised you that portraits may be service-only items and not subject to sales tax. The verbiage on this that I've seen was very clear that portraits are taxable merchandise, unless it has changed. But to your point, the state will never penalize you for giving them money, only for not doing so. So I always charge sales tax.

As for out of state sales, NC puts the onus on the buyer here that you have to report purchases from out of state and pay "use tax" on them. So it releases the seller from another state from having to be knowledgeable of NC law and to try to collect tax from anyone ordering from here--an impossible expectation. My assumption has been that other states operate the same way, and that if a client commissions a portrait from another state, I don't have to collect sales tax on it--that it's their responsibility to report it and pay tax within their own state if required.

I have verbiage that addresses retention of rights on both my commission agreement and the bill of sale. I figure that if my clients don't raise a question after having been informed twice, then I'm okay to use the painting's image in advertising etc. and I do so. To Chris's point, if there's any uncertainty, as a courtesy I let my clients know what I'm doing and ask how they wish to be identified (or not), like on my website for example.

I'd have an issue with a client if they published a giclee of their child's portrait and sold it, but so far this hasn't happened. If they use it on a Christmas card, though, I consider it free (and welcome) dissemination of my work and I'm grateful for any effort that doesn't cost me anything.

But all of this discussion tells me that I need to talk to the legal guys again and tighten all of this up. I like some of Terri's more specific verbiage. Thanks to everyone for the research, links and advice.

--TE