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.
430.0230 Word Processing. A word processing operator keyboards and records an address list and standard letter on magnetic media. The letter is then automatically typed to each person on the address list. The pre-recorded address list is then used to address envelopes inserted into the machine. The charges made for setting up the machine, keyboarding the material and typing out the letters automatically are taxable. The charges made for addressing the envelopes are nontaxable if separately stated.
An author brings a word processing company a manuscript (could come in many forms—dictated on a cassette, handwritten, previously typed, or a combination of all three). The operator keyboards the material and records it on magnetic media. A draft copy of each page of the recorded material is printed out (typed automatically) and given to the author to proofread. The author makes corrections and changes on the draft and returns it to the operator. The operator makes the necessary changes using the word processing machine. A final copy is then printed out for the author to submit to a publisher. The charges made for the original keyboarding of the manuscript, printing out the draft copy, editing, and printing out a final copy are nontaxable. If carbon copies are prepared at the time of the original copy they are nontaxable. If photocopies are prepared they are taxable.
An attorney brings several paragraphs to a word processing company which uses word processing equipment to keyboard and record the paragraphs on magnetic media to form a "paragraph library." The attorney can then notify the company to select, for example, paragraphs 1, 8, 11, 29, 16, 12, 87, 100, 56, and 57 in that order to create a will for his client. The attorney provides variable information to be inserted into proper position in the paragraphs, for example: maker of the will, maker's spouse, maker's children and their date of birth, city and county of residence. The operator instructs the machine (with keyboard commands) to assemble those specified paragraphs with the necessary variable client information and print out (automatically type) a will. All of the charges made for keyboarding original paragraphs, printing out a draft of all paragraphs for the attorney's use, assembling the paragraphs as requested, and printing out individual wills and any carbon copies of the original are nontaxable. If any photocopies are made, they are taxable.
A client has a list of 2,000 names that he is going to use monthly for a mailing. Every month the list has to be typed on labels to be applied to envelopes, sorted into zip code sequence, and mailed. The word processing company keyboards the names and addresses and records them on magnetic media. The machine is instructed (using keyboard commands) to sort the names into correct zip code sequences before the list is finally stored on the magnetic media. Each month the equipment is set up and, with an operator in attendance (giving keyboard commands), the names are printed (automatically typed) on continuous form labels. The charges made by the word processing company for keyboarding original names and addresses, setting up and performing sorting, and the monthly set up and print out of the names onto labels are all nontaxable charges for addressing.
When a word processing company types identical letters using word processing equipment, the charges made are taxable since the work is taxable printing. If the same letters are typed by a typist on a regular typewriter, tax does not apply.
Tax does not apply to charges made when a word processor is used to produce copy which is acquired and used exclusively for reproduction purposes since Revenue and Taxation Code section 6010.3 excludes typography from the definition of sale or purchase. 7/2/82; 7/16/82.