Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013

Sales and Use Tax Annotations

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475.0000 RESALE CERTIFICATES—Regulation 1668

Annotation 475.0170

475.0170 Resale Certificate—Printing Aids. A corporation specializes in the preparation and printing of parts lists and maintenance catalogs. It prepared reproducible copies of illustrated parts and parts lists from which illustrated catalogs were printed. The catalogs were sold to Company B for resale to its customers. For these contracts, the corporation subcontracted with a printer for the actual production of the catalogs. The printer invoiced the corporation for the printing and they in turn, billed Company B.

On later contracts, the corporation did not contract for the sale of the catalogs. Rather it prepared reproducible copies of the catalog and delivered same to the printer designated by Company B. Company B had contracted directly with the printer for the production of the catalogs to be resold. The corporation's responsibility ceased upon delivery of the camera ready or reproducible copies to the printer.

For these later contracts, the corporation had received purchase orders from Company B stating: "For resale. Not subject to California Sales and Use Tax. Seller's Permit Number (permit number given)."

Under these contracts, the corporation retained title to the camera ready art and reproducible copies used by the printer. However, Company B would purchase copies of the camera ready artwork, used by the printer, for ten cents per page. The furnishing of the camera ready art and reproducible copies by the corporation to Company B were leases subject to tax. The statement on the purchase orders was ineffective, because: (1) the purchase orders with the "For Resale" notation did not call to purchase the camera ready artwork or reproducible copies, only the catalogs; and (2) since the corporation retained title to the camera ready art, and knew the reproducible copies were not going to be resold, it could not accept the certificate in "good faith". 4/12/73.