Sales Tax on Handmade Items, Art Commissions and Craft Fairs

Do I have to charge sales tax on handmade items?

Usually yes. Handmade is not an exemption in California, Texas, Minnesota or New York: each taxes a sale by what the item is and where it is sold, not by who made it. California says a seller of new or handcrafted items needs a permit even when selling temporarily. Texas says its occasional-sale exemption does not reach artists or craftsmen who make items for sale. Minnesota taxes most arts and crafts, including paintings, pottery and jewelry, but not most clothing. New York lists craft items as taxable and says a seller of taxable items at a craft fair once a year still has to register. New York exempts clothing and footwear priced under $110 per item from the state tax, but local tax still applies unless the county or city also exempts it (TB-ST-122).

Selling at an event in another state usually needs that state's permit, even for one weekend; see the permit section below.

A case is not simple when you already sold at events without a permit, a state has sent a letter, you sell at events in several states, take commissions, ship to buyers in other states, sell online as well as in person, sell through a corporation, or event cash, card and marketplace reports do not agree. If you already sold without a permit or a state has written to you, read the section on selling at fairs without a permit below first. Each state decides which items are taxable and what counts as a presence there. Clothing and food can follow separate rules.

Gather before you decide:

• Every event: dates, address, city and county, and what you sold.
• Sales per event, split into taxable, exempt and resale sales (sales to a buyer who will resell the item and gives you a resale certificate).
• Commissions: the invoice, the delivery address and how the piece was delivered.
• Online orders by ship-to state, and marketplace reports showing tax collected.
• Any permit, letter or notice from a state or an event organizer.

This page reads five states. Your home state and each event's state set their own rules for items, permits and deadlines. Find them on the state revenue department's site, and register where you will sell before the first sale.

Does a booth count as a significant presence in another state?

Yes in California and Texas, the states read for this page: each treats a temporary selling location as a presence in the state, however short the event. Texas counts a temporary location such as a kiosk, an employee or representative who sells or takes orders, and delivery in vehicles you own or lease. California counts a permanent or temporary office, sales room or other physical place of business, and a representative who takes orders.

California limits the ongoing duty when a seller's only physical presence in the state is convention and trade-show activity as federal tax law defines it, lasting 15 days or less in any 12 months, with $100,000 or less of net income from it in the prior calendar year. Sales at the show and orders taken there stay taxable, and sales over California's threshold still count (RTC 6203). Ask CDTFA whether your show counts.

Otherwise a presence removes the protection of a sales threshold (the amount of sales into a state above which a remote seller must collect there): the Streamlined Sales Tax states' guidance says a seller with a physical presence must register regardless of the amount of sales. Thresholds: sales tax economic nexus thresholds by state. Presence and marketplaces: where you must collect sales tax.

Do I need a permit in another state for one weekend at a fair or convention?

Usually yes, in the state where the event is held. A short event does not by itself create an exception in California and Texas, but a few states exempt certain trade-show exhibitors, so read the event state's page.

Taking orders counts. Texas and California both reach orders taken at an event, even when the goods ship later. Other states set their own forms, event limits and deadlines. For a state not listed, search its revenue department site for "special event" or "temporary vendor", and ask the organizer what the state requires of sellers.

How does a temporary seller's permit work: cost, location and due date?

Each state sets its own rules: California issues a free temporary permit, Texas uses its regular permit, and Washington issues a certificate for each event. In California, a temporary seller's permit is free and covers one selling location for 90 days or less (CDTFA).

• Register online with a start and end date for each location, up to 90 days before the start date.
• One permit can list several locations only if they run in the same 90-day period. A location cannot be added later.
• A seller who already holds a permit for a permanent place of business registers a sub-permit for each temporary location instead (Publication 111).
• The return is due by the last day of the month after the one in which the location closes. A location that closes in January has a return due by the end of February.

CDTFA describes temporary permits as issued to individuals with no permanent place of business, so a corporation or partnership should ask CDTFA which registration fits.

Texas works differently. Its fairs guide describes no separate temporary permit: an out-of-state seller operating there temporarily needs the regular permit, which has no application fee. You collect 6.25% state tax plus up to 2% local tax at the rate for the event's location, and the receipt must show the tax or say it is included. Returns are due by the 20th of the month after the reporting period, and a permit holder files even with no sales; a late return adds $50 even with no tax due, and tax paid late adds a penalty of 5% (1 to 30 days) or 10% (over 30 days), plus interest (Comptroller). When you are done in Texas and plan no more sales there, you can close the permit; until then, returns keep coming due (Publication 96-211).

Does the fair organizer collect sales tax, or do I?

Usually you do, under your own permit. The organizer's job is to check permits or, in some states, to collect tax on sellers who have none.

• Texas: an event promoter is a seller too. A promoter must collect and remit tax on taxable sales by sellers without an active permit, so promoters ask each seller for one. In a market with a central cash register, the market collects the tax and each seller reports what the market sold for it as total sales, not as taxable sales (Publication 96-211).
• California and Minnesota: the organizer must verify your registration before renting you space, so expect to show your permit number (Publication 111; Fact Sheet 148).

Booth space fees are not taxed in Texas (Publication 96-211) or Minnesota. Minnesota does tax rentals of equipment such as display booths (Fact Sheet 148). An organizer's check does not replace your permit or your return. Expect to be asked for your permit number and to give your business name, address and a description of what you sell.

Is a custom or commissioned piece taxed like a product or a service?

It depends on the state, and the states read for this page tax the finished piece. Texas lists producing artwork among labor that results in a taxable item, and taxes charges for making a product even when the customer supplies the materials (Publication 96-259). California's guide for graphic artists says charges for artwork are generally taxable when delivered in tangible form, except preliminary art lent only for review and approval, and that labor to create finished art is taxable even when the customer supplies the materials (Publication 37). That guide covers artwork made for commercial purposes, so confirm with CDTFA how it applies to a fine-art commission. Minnesota lists paintings, sculptures and caricatures among taxable arts and crafts (Department of Revenue).

In the states read for this page, the question is whether the buyer receives a tangible piece. A tangible piece is taxed as a product there, and the labor of making it is part of the taxable charge. California excepts preliminary art lent only for review and approval. Other states may treat custom work as a nontaxable service, so read the delivery state's rule before you quote a price.

Whether you must collect on a commission delivered into a state follows the shipping rules below. Delivering the piece yourself changes that: Texas counts delivery in vehicles you own or lease as being engaged in business there (Publication 94-108). Where the seller does not collect, the buyer may owe use tax (the same tax, owed by the buyer when the seller did not charge it): a Texas buyer owes use tax on taxable items bought from a seller who does not charge Texas tax.

What about pieces I ship to buyers in other states, and sales through a marketplace?

Shipments turn on thresholds and on how long an event presence lasts; marketplace sales turn on who collects. A seller with no presence in a state generally collects there only after passing that state's economic nexus threshold, and each state sets its own. A presence can outlast the event: Washington counts physical presence in the current or immediately preceding calendar year (RCW 82.04.067), so ask each event state how long its duty lasts. See sales tax economic nexus thresholds by state, Texas and California.

Two traps catch event sellers:

• A threshold protects only remote sales. A booth in the state is a presence, so online sales below the threshold do not cancel a permit duty for the event.
• A marketplace collects only on its own orders. California says a marketplace seller whose retail sales are all facilitated by a registered marketplace facilitator (the site that runs checkout and collects the tax) generally need not register, but direct sales that no marketplace facilitates may require a permit (CDTFA). Sales at your own booth are direct sales. Texas likewise relieves a marketplace seller of collecting only on sales the marketplace provider has certified it collects (Comptroller).

When does selling stop being occasional?

In the states below, the occasional-sale rules are written for people clearing out personal items, and the California and Texas rows say they rarely or never reach someone who makes goods to sell.

What should I record at each event?

Sales tax you collect is not your revenue; it is owed to the state. Record it as a liability, separate from sales, for each event. If your booth prices include tax, set exempt sales aside first, then divide the taxable receipts at each rate by 1 plus that rate to get sales; the rest is tax.

Treat each event as its own set of numbers, because the permit, the location and the tax rate follow the event. For each one, record:

• The event name, dates, address, and city and county or district. Rates vary by location, so use the state's rate look-up for the venue.
• The permit or sub-permit number, and the written seller information you gave the organizer (in California, form CDTFA-410-D).
• Gross sales, split into taxable, exempt and resale sales, with the tax collected and the rate used.
• Orders taken for later delivery, with the delivery state.
• Card reader and payment app reports for the event, matched to the cash count.
• California: whether the venue is a state-designated fairground. Those sales go on their own line of the return; no extra tax is due (CDTFA).

Keep commission invoices with the delivery address and method, and marketplace reports that show tax collected by state. A California marketplace seller who is registered still reports total sales and may deduct the facilitated ones (CDTFA). Texas requires sales and use tax records to be kept for at least 4 years (Comptroller).

Tax you collect belongs to the state. In Texas it is held in trust, and an owner, officer or manager who controls paying it over and willfully fails to is personally liable (Tax Code 111.016). California does the same when a business closes with tax unpaid (RTC 6829).

I already sold at fairs without a permit: what now?

Unpaid tax on taxable event sales is generally still owed, and Texas says a seller who operates without a permit may face a penalty. These facts decide how past event sales are handled:

1. Every event, with its dates, sales, state and county.
2. Whether the organizer collected tax on your sales, which a Texas promoter must do for a seller without a permit.
3. Whether a state has already contacted you.

Some states' disclosure programs are open only to a seller the state has not yet contacted, so what you do first can change what you owe. Eligibility, look-back periods and the order of steps are in catching up on uncollected sales tax. Sales made at a California booth are subject to California sales tax, which California's out-of-state use-tax disclosure program excludes (CDTFA).

One state and a few events can be worked out from your list. Several states, events with no records, or a letter already received often call for a professional, because the order of steps can decide whether a disclosure program is still open.

Example

Figures are US dollars and illustrative.

Pottery at a three-day fair in Austin

An Oregon potter sells $8,000 of pottery at a three-day craft fair in Austin. Oregon has no sales tax, but that does not decide this sale. The booth is a temporary location in Texas, so the potter needs a Texas permit, which has no application fee, and collects at the venue's rate, assumed here to be 8.25 percent: $8,000 × 8.25% = $660. The potter files the Texas return for the period and closes the permit after the last Texas sale.

A commission delivered to Texas

A Colorado painter takes a $2,400 commission for a buyer in Texas. Texas lists producing artwork as taxable labor, so the sale is taxable: about $198 at an assumed 8.25 percent. If the painter ships the piece, has no Texas presence and is below the Texas remote-seller safe harbor, the painter generally does not collect, and the buyer generally owes the $198 as use tax. If the painter delivers it in a personal vehicle or sells at a Texas fair, Texas treats the painter as engaged in business, so the painter needs a permit and collects.

A four-day fair in California

A Florida jeweler, whose sales into California stay below its thresholds, sells $6,000 over four days at a California fair. California requires a permit for crafts sold even briefly. The jeweler registers a free temporary seller's permit with the fair's start and end dates and collects at the local rate: the 7.25 percent base rate gives $435, plus any district tax. If the fair closes in March, the return is due by April 30.

Different for you?

• You sold at events without a permit, shipped to many states, or a state letter arrived: each state sets its own permit, return and look-back rules, and a disclosure program can close once a state has made contact. Which states you owe, which permits to get, how to report past event sales and how to track tax at each event from now on depend on your records. Start with catching up on uncollected sales tax; event-by-event and state-by-state records are bookkeeping work.
• You sell at events in several states each year, or event, card and marketplace sales do not agree with each other: tax rates, permits and returns follow each event, so the records have to as well. See bookkeeping for event and sales tax records.
• You sell through a corporation or LLC: a permit in a state can bring that state's income or franchise tax questions too. See sales tax nexus versus income tax nexus and, for Texas, Texas sales tax for out-of-state sellers and Texas franchise tax.
• You are based outside the US: see foreign sellers and sales tax.
• You ship from your own checkout or a marketplace shop: see where you must collect sales tax and marketplace shop bookkeeping.
• You need the income tax side of your sales: a state can also reach an out-of-state seller's income. See online seller income tax.
• You need the cost of what you make: see cost of goods sold for handmade products and, for tax-free supplies for resale, resale certificates.