Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
100.0000 ADVERTISING AGENCIES, COMMERCIAL ARTISTS AND DESIGNERS—Regulation 1540
(b) DELINEATORS AND DESIGNERS
100.0074.100 Design of a Television News Set. A taxpayer contracted to design a news set for a television station. Under the contract the taxpayer will perform two functions. One function is titled, "Design/Consulting Service," which includes preliminary drawings and 3-D drawings of the approved design concept. The contract provides reimbursement for per diem, mileage and other expenses associated with the completion of the contract. The other function is titled "News Set—Move to New Studio," which includes consultation to facilitate moving the news set, design consultation to select colors and wall coverings, charges for a "install tech," and per diem for the "install tech."
Under the "Design/Consulting Service" function of the contract, sales tax applies to the entire amount charged for drawings, paintings, designs or sketches transferred to the customer. Tax does not apply to charges for preliminary art if the charges are separately stated and meet the requirements of Regulation 1540(b)(4)(A). Taxable gross receipts also include charges for all expenses incurred including travel expenses and cost of blueprints used. However, a resale certificate may be issued to purchase blueprints from other vendors which are resold to the customer.
If the function titled "News Set—Move to New Studio" is optional, that is, the customer can purchase the first function which involves the sale of tangible personal property without also purchasing the second function, then the charge is not a service that is part of the sale of tangible personal property. In that case, sales tax does not apply to the taxpayer's charge for those separately stated consultation charges. 6/30/95.