Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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P

420.0000 PHOTOGRAPHERS, PHOTOSTAT PRODUCERS, PHOTO FINISHERS AND X-RAY LABORATORIES—Regulation 1528

Annotation 420.0110

(a) IN GENERAL

420.0110 Film Used to Produce Driver's Licenses. A taxpayer has a contract with the California Department of Motor Vehicles (DMV) to print state driver's licenses. Under the contract, the taxpayer is to provide 35mm color negative film and equipment to DMV. DMV employees expose the film and return it to the taxpayer. The taxpayer develops the film and makes a positive which becomes part of the driver's licenses produced by the taxpayer for DMV. The license and a microfilm copy are returned to DMV and the negatives are stored by taxpayer until DMV requests that they be destroyed.

Since there was no separate statement on the bill for the film and the contract specifically stated that taxpayer is to retain title to the film, the film was not sold to DMV prior to any use by the taxpayer. The fact that, by contract and for security reasons, DMV severely restricted the use of the film once the licenses were printed does not determine which entity holds title to the film. Accordingly, tax applies to the purchase price of the film to the taxpayer. 9/30/91.