Some of our clients have questions about the taxes they’re charged on different types of orders. Because of different California and federal tax rules regarding sales, rentals, and labor, you might find yourself in one of the following situations.

Why was I not charged tax on my rental?

Desired Effect pays sales taxes upfront on the things you rent, which means you don’t have to pay sales tax to rent them!

This is in part because of a tax policy called ‘use tax,’ which allows us to pre-pay sales tax on our inventory once and save you the tax down the road every time you rent from us. Not every rental company does this, which is why you might see sales tax charges on your invoice from other companies and not on invoices from Desired Effect.

The following articles from the California tax administration office contain more information about use tax, sales tax, and how they apply to you when you rent from Desired Effect:

Regulation 1660

Publication 46 (explains Regulation 1660)

Why was I not charged tax on labor?

In accordance with applicable sales tax laws, Desired Effect does not charge sales taxes on labor.

This includes things such as event staffing, labor when loading events in and out of a venue, and training on installs.

When do I get charged sales tax?

You’ll get charged sales tax on non-rental, non-labor items, unless you are an organization which is specifically exempt from paying sales tax.

This can mean that you get charged sales tax on just part of an invoice. For example, if your invoice for an event includes a sound board rental and a mic tape purchase, the rental will not be taxed but the sale of mic tape will.