Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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375.0000 MOTION PICTURES—Regulation 1529

Annotation 375.0902


(1) Generally

375.0902 Qualified Production Services. Tax application for the various charges in connection with the production of all or any part of a qualified motion picture are set forth below:

(1) Matte Painting

A matte painter is not performing any fabrication on film, tape, or other audio visual embodiment. Accordingly, charges for matte paints are taxable.

(2) Viewing Copies or Safety Masters

Sales of viewing copies or safety masters are not taxable if the intended use at the time of sale is not exhibition or broadcast. However, if the transaction called for delivery of 100 finished copies, it would appear that this number would actually be for exhibition or broadcast. The seller should in all cases obtain a statement in writing from the buyer to the effect that the copies, regardless of number, are not for exhibition or broadcast.

(3) Audio Tapes

Audio tapes can be used in a qualified motion picture or as a sound recording master tape. Use in a qualified motion picture is a use by the sound recording studio and not a sale. On the other hand, if it is used for a sound recording master tape, it is sold by the studio and the tax is measured by the sales price of the unprocessed media. A sound recording studio should obtain a statement signed by the purchaser stating the intended use of the tape.

(4) Release Prints

The first release print transferred by the producer to the sponsor is the qualified motion picture of which the producer is the consumer. Tax applies to charges to the producer by the processing lab for this print, regardless of the release date.

Subsequent release prints may be purchased by the producer for resale to the extent such prints will be sold by producer to the sponsor.

(5) Seller's Permit Requirements

Persons who perform only qualified production services and make no retail sales should not hold seller's permits. If they purchase equipment from out-of-state vendors who are not engaged in business in this state, they should apply for a consumer's use tax permit and report and pay use tax on their out-of-state purchases.

If persons who perform qualified production services also make retail sales (i.e., sales of release prints, dupe tapes, prop., etc.), they are required to hold seller's permits.

If a sufficient number of sales of equipment are made in a twelve month period, the seller will be required to hold a seller's permit by that reason alone even if no sales of film related items are made. (Regulation 1595(a)(1)(4).)

(6) Film Intermediates

Qualified production services include negative developing by the reverse processing method, the making of a work print from the developed negative, editing of the work print, interpositive prints, and internegatives. Charges for these services are not taxable.

(7) Tape to Film, Film to Tape and Tape to Tape Transfers

If transfers are performed for an intermediate purpose or to manufacture the answer print or master tape, the charges would not be taxable. If the transfers are made to manufacture release prints or duplicate tapes for exhibition or broadcast, the charges would be taxable unless otherwise exempt (i.e., for resale, sale in interstate commerce, etc.).

(8) Trailers and Slide Films

Trailers are qualified motion pictures, whereas slide films are not.

(9) Special Effects, Titles and Credits

The person who actually performs the filming of special effects and credits is the one performing qualified production services. The sale of miniatures, artwork, etc., for use in special effects, titles and credits is taxable. The persons who perform the qualified production services may not purchase these items for resale and transfer title prior to use. The performers of qualified production services are consumers notwithstanding that title to such property is transferred.

(10) Series Episodes

Each episode in a television series is considered a separate qualified motion picture. 1/13/89; 5/29/96.