Tax Type
Retail Sales and Use Tax
Description
Phototype settings to advertising agencies and design studios
Topic
Taxability of Persons and Transactions
Date Issued
02-27-1987
February 27, 1987
Re: Ruling Request/ Sales and Use Tax
Dear ********************
This will reply to your letter of July 29. 1986 seeking information on the correct application of the sales and use tax to the provision by *********** (Taxpayer) of phototype setting.
FACTS
Specifically, you ask whether the tax applies to the Taxpayer's provision of phototype setting to advertising agencies and design studios for use in the production of media advertising, direct mail and other promotional items.
RULING
Effective July 1, 1986, the sales and use tax does not apply to "advertising", which is defined in §58.1-602(23) of the Virginia Code as "the planning, creating or placing of advertising in newspapers, magazines, billboards. broadcasting or other media, including without limitation, the providing of concept, writing, graphic design, mechanical art, photography and production supervision." This section provides further however that "[a]ny person providing advertising as defined herein shall be deemed to be the user or consumer of all tangible personal property purchased for use in such advertising."
As a result of this law change, the Department has recently revised §630-10-3 of the Retail Sales and Use Tax Regulations, a copy of which is enclosed.
Inasmuch as the sale of all typesetting products is regarded as the sale of tangible personal property under §630-10-108.1 of the regulations, and since advertising businesses are by statute deemed to be the users and consumers of all tangible personal property purchased for use in the production of advertising, I find no basis for concluding that phototype setting such as that provided by the taxpayer in this case qualifies for exemption from the tax when it is provided to advertising businesses or design studios in connection with the production of advertising.
I hope the foregoing has responded to your question but please let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner