Film Accounting Glossary
Sales and use tax
What is sales and use tax?
Also called sales tax, or use tax.
Sales and use tax is the state and local tax on purchases and, in many jurisdictions, on equipment and vehicle rentals, and it is frequently the difference between a quoted rate and what the production actually pays.
Some jurisdictions exempt production purchases or rentals entirely as part of their incentive package, and some require an exemption certificate on file with each vendor. Use tax applies when goods are bought untaxed elsewhere and used locally, which catches out-of-state equipment orders.
Example
A $1,350 weekly vehicle rental in a state taxing rentals at 8% actually costs $1,458. Across 22 vehicles for nine weeks that is roughly $23,000, and in a jurisdiction offering a production exemption it is zero, provided the certificate is on file with each vendor.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Applied at the vendor's invoice. Exemption certificates are distributed at vendor onboarding, not chased at wrap.
Common mistake
Budgeting rentals net of tax in a jurisdiction that taxes them. On a large vehicle or equipment package that omission is a five-figure surprise.
Related questions
- Do film productions pay sales tax on rentals?
- In many jurisdictions yes, unless a production exemption applies. Where one does, the exemption certificate has to be on file with each vendor.
- What is use tax?
- Tax owed when goods are bought untaxed elsewhere and then used locally, which commonly catches out-of-state equipment and supply orders.