Tax Type
Retail Sales and Use Tax
Description
Electronic publishing and laser printing; Single vs. multiple copies
Topic
Taxability of Persons and Transactions
Date Issued
06-29-1988
June 29, 1988
Re: Ruling Request/ Sales and Use Tax
Dear****************
This will reply to your letter of December 22, 1987 on behalf of ******* (taxpayer), seeking a ruling on the correct application of the sales and use tax to the taxpayer's electronic publishing and laser printing business. We apologize for the delay in providing you with this response.
FACTS
Through the use of electronic publishing and laser printing equipment the taxpayer organizes, formats, edits, prepares and produces reports, business documents and manuals for clients. You ask whether the taxpayer's charges to clients for design, copy writing, formatting, editing and other services in the production of single copies of the foregoing reports and business documents qualify for exemption from the sales and use tax under Virginia Code §58.1-608(2). You also seek confirmation of your understanding that when the taxpayer produces multiple copies of reports, manuals, or other documents the total charge for the production of such items will be taxable, including charges for editing, formatting, design, etc.
Lastly, you ask whether the taxpayer's laser printing and electronic publishing equipment, as described in brochures remitted to the department, qualify for the industrial manufacturing exemption in Virginia Code §58.1-608(1). The taxpayer expects that this equipment will be used more than 50% of the time in the production of multiple copies of the above referenced documents and reports.
RULING
§58.1-608(2) of the Virginia Code provides an exemption from the sales and use tax for, "...personal service transactions which involve sales as inconsequential elements for which no separate charges are made..."
Based on the foregoing, and the department's August 4, 1986 ruling referenced in your letter, copy enclosed, the taxpayer is the provider of a personal service when it prepares and produces a single copy of a report or business document for its clients. When the taxpayer goes beyond the provision of a single copy, and produces multiple copies of reports, manuals or other documents, it is engaged in making retail sales of tangible personal property, and must add the tax to the total charge for such items, including charges for design, formatting, etc. of course, the taxpayer may purchase under resale certificate of exemption, Form ST-10, copy enclosed, any materials, such as envelopes, paper, brochures, folders, staples, etc., which it knows at the time of purchase will be resold to clients subject to the tax.
When making bulk purchases of supplies, some of which will be used in the service of producing original documents and some of which will be used in the printing of multiple copies of documents, reports, etc., for sale, the taxpayer may purchase all of such items exempt of the tax for resale, under the above referenced ST-10. However, when any of these untaxed supplies are later used in the service of producing original documents, reports, etc., the taxpayer will be required to remit the use tax directly to the department, based on the cost price of such supplies at the time of purchase.
Lastly, since the laser printing and electronic publishing equipment mentioned above is used by the taxpayer in creating new printed products, rather than in making duplicate copies of originals, such equipment may qualify for the manufacturing exemption. In order to qualify for this exemption, each item of equipment must be used more than 50% of the time in the printing of documents, reports, etc., for sale to customers, rather than in the service of producing original documents for customers.
I hope that the foregoing has responded to your questions but let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner