Sales Tax Articles
Sales Tax State Activity Update - January 2005
New York Issues Advisory on Advertising
Background
An Advisory Opinion issued by the Commissioner of Taxation and Finance ruled on the taxability of various purchases made by a taxpayer that specializes in the production of video and audio advertising. The taxpayer did not do media placement, but would deliver the advertisements to a media outlet of the client's choice.
Analysis
The taxpayer's sales of video tapes, audio tapes, CD-Roms and the like are retail sales of tangible personal property which are subject to tax pursuant to section 1105(a). Charges for music, audio recordings or artwork delivered electronically pursuant to contractual agreement are not sales of tangible personal property and not subject to tax. Charges for pre-production, script writing and shooting of film when incurred in making a sale of tangible personal property are included in the tax base even if stated separately. See section 1101(b) (3) and regulation 526.5(e).
Script writing and talent and voice over services are not enumerated as taxable services under section1105( c ). Make up and stylist services are also exempt from state sales and use tax, but if performed in New York City are taxable at the city rate of 4 1/8%.
Conclusion
Purchases of tangible personal property, and services to such tangible personal property that will become a component of product and transferred to the customer may be purchased tax free. Tax will be charged on the receipts from the tangible property sold to and transferred to the customer. If the identical product were delivered electronically, no tax would be due.
You can view the full opinion here.
(New York Office of Tax Policy Analysis Technical services Division, Advisory Opinion, TSB-A-04 (26)S November 22, 2004)
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