Authors, don’t pay sales tax twice!

Typesetter

Not every part of being an author means I get to live in a fantasy land full of color and adventure. Many parts are boring and gray. If ever there’s an enemy to creativity it’s a tax form. To have success as an author (or, if you have any success as an author) you’re going to need to be familiar with taxes.

My journey begins on the phone with a tree nursery. I jointly own a very small Christmas tree farm and we plant less than 2 acres of seedlings every year and we’ve been doing that for a few years now when the nursery asks why we haven’t filed a form so we can get the seedlings tax exempt—which is something you can do when you produce a product for resale. It’s why farmers get tax exempt gas for field equipment, parts, etc. My grandparents on both sides farmed—it’s a wonder I didn’t think of that before.

Fast forward a month and I’m purchasing about $400 worth of books (wholesale cost) for an event when I have the thought, “shouldn’t this be tax exempt the same as buying seedlings?” Createspace did not have a ready answer for me and so I had to purchase those books and pay sales tax. The event coordinators required me to have all my tax document ducks in a row and so I began ferreting out info—especially when they announced a state tax collector will be on hand to demand tax payment at the end of the three day convention. I felt like I was in Biblical Rome…

Createspace did tell me that they have a process, but it’s up to me to know the details since it varies from state to state. Here’s their response:

Greetings from CreateSpace.

We do not collect sales taxes in all states for retail orders. For states where we do collect sales taxes, your purchase is subject to sales tax unless it is specifically exempt.

If you are a reseller making tax exempt wholesale orders, please submit the appropriate Uniform Sales and Use Tax Certificate and Reseller Certificate to the email, address or fax number below:

Email: info@createspace.com, Attn: CreateSpace Direct Reseller
Fax: (206) 922-5928, Attn: CreateSpace Direct Reseller
Shipping Address:
CreateSpace
Attn: Customer Service
4900 LaCross Road
North Charleston, SC 29406

Please allow one week for form processing. For additional information, please refer to the form instructions or your state’s Department of Revenue.

If you’re like me, your eyes gloss over when you read things like the above. Luckily, I’d already been forced to get those above mentioned forms on threat of crucifixion by my state tax guy. The form I needed in Minnesota is ST3 which is the same one as I needed for my Christmas tree seedlings. It was actually easy to fill out once I had the other info like my sales/use number, etc. It’s about a page and flows kind of like a W9 or W2.

A nice lady named Dianne at the MN tax office confirmed with me that (at least in my state) if you produce something for resale you don’t have to pay sales tax on it twice and she actually told me which boxes to check on the ST3 after I explained how I bought books and resold them at conventions.

The fact of the matter is: you don’t need to let the IRS double dip on taxes and charge you twice. The difference between being a writer and being an author is that authors plan to be read by the public—as much as it’s a passion and art, it’s also a business venture. Be sure to run it as such and make sure that your paying the same fee over and over again which will eat into your profit margin (which, like most Indies, will probably just go to paying travel costs and booth/entry fees anyway). Being an author shouldn’t cost you more than you make.

Following are a couple of great articles to help guide you on researching your tax liability as an author:
https://www.thebalance.com/sales-tax-facts-for-book-authors-2799901
https://www.thebalance.com/taxes-and-the-book-author-2799907
https://janefriedman.com/author-taxes/

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