Charity auctions & sales tax?

[Terri Ficenec]

This may be a really stupid question, but. . .
If you donate a small painting, say a head & shoulders portrait, to a charity auction, would you need to collect sales tax on the value of the painting when it is ultimately delivered? (Or is there none since you are not otherwise receiving cash for the portrait?)

I'm assuming that if the painting is upgraded, you would just collect tax on the portion that they pay you?

Or does this differ by state???

[Julie Deane]

Hi Terry -

I am glad you asked this, as I've donated a 25% off coupon to several charities and hadn't thought about this part of it.

Unless someone corrects me, I would assume that sales tax is imposed only on any money the artist receives.

[John Crowther]

Terri, it's my understanding that you are not responsible for sales tax, since what you're doing in effect is making a donation. It's possible, however, that you can get a write-off if the organization is a not for profit.

John C.

[Michele Rushworth]

Excellent question and one I had not thought of before. I have, in the past, only collected sales tax on actual money received for upgrades. You should probably contact your state tax office, or accountant.

[Terri Ficenec]

Thanks everyone! My instincts were that the tax would only apply to money that I received, too. But as I was laying out the 'Certificate' I started to put the disclaimer 'does not include Sales Tax, framing, shipping or travel expenses' from my fee schedule and that got me thinking... will contact the state to confirm how this works and if I get a response, will pass it along. . .

Something else I've been stewing on is what if something were to happen to me that made it impossible for a donation to be redeemed (o.k. admittedly morbid, but possible )?... Presumably the donation's purchaser might have paid a fair amount for it... with nothing to show for it, since I am a sole proprietor, are they just out of luck? Would my 'estate' be liable for it?

[Michele Rushworth]

People can sue for all sorts of lame things. I can't imagine someone would force an artist's estate to make good on the money for a charity auction donation, but who knows!

I once had a winning bidder who decided not to go through with his portrait (he decided he wanted me to paint his horse instead of himself, and I don't do portraits with just animals in them). The auction sponsors refunded his bid amount.