[Tom Edgerton]

Here in North Carolina, the law is clear. Artwork is a tangible product, not a service, and is subject to sales tax, regardless of your professional status.

When I was a commercial illustrator here, the barroom debate among all of us was whether to charge sales taxes. A lot of the illustrators didn't, and lived to regret it. If audited by the state revenue guys, you became liable for sales taxes uncollected through your entire work history, and applicable tax penalties. One guy I knew was driven out of business after an audit. A heavy price to pay just because he "didn't want to mess with it."

Also, the seeming advantage of a tax exempt number for purchases for your business is offset, in my opinion, by the added paperwork it entails. For example, if I buy goods or services that go into the production of my product and don't pay the sales taxes under the exemption provision, I am then supposed to collect these additional sales taxes from my client and report and pay them to the state. I have enough hassle keeping up with and collecting the taxes on my portraits. So I always pay sales taxes on purchases for my work, and then bill them to my client as incurred.