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 375.0984


(1) Generally

375.0984 Production Services. Company A, a California manufacturer of sporting goods equipment, contracts with Company B, a California marketing communications company, to oversee the development and creation of concepts used in marketing and advertising Company A's products. Company B contracts with studios, film producers and others for various productions services including television commercials, promotional advertising spots, and video sales presentations. Company B also contracts with various vendors for creative services required for the production of the commercials. These services may include such items as: music, editing, photography, copyrighting, medium transfers, layout, and general production supervision and consulting. Company B invoices Company A for the filming and production expenses related to the creation of the commercials. In each instance, title to the master tape containing the commercial transfers to Company A.

Since title to the master tape containing the commercial transfers to Company A, it is assumed that B's contract is only to provide A with a master tape and that B contracts with the vendors on its own behalf. It is also assumed that the charges for items of tangible personal property are merely charges to B by vendors and which B passes on to A as part of the charge for the master tape.

Under Regulation 1529(b)(1)(C)(1), sales tax does not apply to B's transfer of the commercial to A when B's transfer is prior to the date that the commercial is exhibited or broadcast to its general audience. Tax applies to the sale of tangible personal property to B by the various vendors where the vendors do not transfer such property in connection with the performance of qualified production services. (Regulation 1529(b)(2).) 4/19/95.