Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
100.0000 ADVERTISING AGENCIES, COMMERCIAL ARTISTS AND DESIGNERS—Regulation 1540
(c) PRELIMINARY AND FINISHED ART
100.0190 Title Clause. An agreement between an advertising agency and its customer includes a title clause that states "all advertisements, copy, and layouts which are prepared shall become client's property and shall be preserved for delivery to client upon request" is sufficient to include preliminary art. This is true even though preliminary art is not specifically mentioned. Under Regulation 1540(a)(11), "preliminary art" includes layouts. It is reasonable to interpret the contract as passing title to all "preliminary art," particularly when "preliminary art" is not excluded from the title provisions any where else in the contract.
Therefore, the separately stated charges for preliminary art are subject to sales tax even though the preliminary art does not become physically incorporated into the finished art. 2/28/95. (Am. 2005–2).