Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Sales and Use Tax Annotations
430.0000 PRINTING AND RELATED ARTS—Regulation 1541
(a) IN GENERAL—ACTIVITIES CONSIDERED SERVICES OR SALES.
430.0195 Printing Blank Municipal Bonds. A taxpayer prints blank municipal bonds and sells the blank bonds to various banks in California. The banks do not sell blank bonds to investors. The bonds must be registered before they are sold to investors. Part of the registration process consists of the bonds being dated as of a registration date, signed by both the county and municipality guaranteeing the bond and the bank registering the bond, and printed with the signature of the county or municipality issuing the bond through a facsimile, rubber stamp or a signature plate containing the official signature.
As registering agents for the counties and municipalities, the banks issue bond certificates to investors. The banks use the forms as part of the registration service that they perform. The certificates are only an indicia of the investor's ownership interest in the municipal bonds. Investors do not enter into contracts with the banks to purchase the security document itself, but rather the interest in the bond that the document represents. The transfer of the bonds to the investors is incidental to the banks' service of registering the bond. For sales and use tax purposes, the banks are the consumers of the forms they use in performing registration services, not retailers of the forms to the investors or to the entity which issue the bond. The taxpayer's sales of the printed blank bonds to the bank are subject to the tax. 9/12/96.