Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
375.0000 MOTION PICTURES—Regulation 1529
(b) ON AND AFTER SEPTEMBER 22, 1988
375.1030 Special Effects Shots by Subcontractor. A vendor is hired by a motion picture producer to generate a special effects shot for a "qualified motion picture." The vendor hires a freelance individual to perform the work which results in a piece of film negative (the effects shot) that the vendor then turns over to the producer for incorporation into the motion picture. The producer pays the vendor and the vendor pays the freelance individual. The vendor only retains a fraction of what the producer pays it as its fee.
When the freelance individual creates and transfers to the vendor the negative embodying the special effects shot, the freelance individual performs "qualified production services." Sales tax does not apply to the freelance individual's charge to the vendor. The freelance individual is the consumer of the property utilized in the performance of that service and sales of the property to the freelance individual are taxable. The vendor is also considered as performing "qualified production services" and its transfer of the film negative to the producer for use in the production of a qualified motion picture is not subject to the sales tax. 7/26/95.