California IDEX Practice Exam

What must an interior designer pay tax on when providing only consulting design services for space planning and interior finishes in California?

1. Client consultations

2. Time spent shopping for the finishes

3. Cost of materials

4. Office rent

The correct answer is: Time spent shopping for the finishes

When providing consulting design services for space planning and interior finishes in California, the interior designer must pay tax on the time spent shopping for finishes. This is because the act of shopping for materials, including the time and effort involved, is considered part of the tangible personal property transaction. In California, sales tax typically applies to the sale or use of tangible goods, and since the designer is involved in procuring these finishes, the tax applies to their time spent in that context. In contrast, client consultations are typically not taxable because they are seen as services rather than sales of tangible goods. The cost of materials would fall under the responsibility of the supplier to charge sales tax to the designer or end client, but the designer does not pay tax directly on those materials. Office rent is considered an overhead expense and is not subject to sales tax. Each of these distinctions is crucial for understanding tax obligations in the context of providing interior design services.