The Alabama Tax Tribunal ruled that a photographer could not deduct sales commissions from the taxable price of photographs.
The taxpayer sold photos to students at schools in Alabama. It paid commissions to the schools on those sales. The taxpayer collected sales tax on its total sales proceeds. However, it reported tax based on the sales proceeds minus the commission amounts.
Sales tax applies to the total value of tangible personal property sold. There are no deductions for service costs or any other expenses. Here, tax applied to the total sales price of the photographs, and the taxpayer could not deduct the sales commissions paid to the schools. Also, the taxpayer had already collected sales tax on the entire sales proceeds, and it could not report less tax than it had collected.