Topic No. 63
Printers are primarily engaged in the business of selling tangible personal property in the form of printed matter. The full purchase price of the print job is subject to sales tax. The purchase price includes the gross value of all materials, labor or service, overhead, and profit included in the final charge to the consumer. A job that is solely labor (e.g., layout) would not be taxable.
There are two definitions which affect the taxability of purchasing items, materials and supplies by a printer. The first is the general wholesale sale definition. For purchases to be exempt the purchaser must be engaged in the business of manufacturing and all of the following requirements must be met: #1 the material is actually and factually transformed by the process of manufacture; #2 it becomes by the manufacturing or compounding process a necessary and recognizable ingredient, component and constituent part of the finished product; and #3 its physical presence in the finished product is essential to the use thereof in the hands of the ultimate consumer. In addition to the wholesale sale provision there is a specific exemption for printers purchasing prepress preparation materials. The purchases of these items by printers are exempt provided the items or supplies are used in the preparation of customer specific layouts, which are eventually sold to a customer, either in their original purchased form or in an altered form and a sales or use tax is demonstrably collected from the printer’s customer unless the customer’s purchase is otherwise exempt from taxation.
Materials sold to a printer which are used by the printer for the printer's own purposes, and are not sold, are subject to taxation.
The following items are examples of prepress preparation materials that may be exempt from taxation when the requirements for exemption are met:
AIRBRUSH COLOR PHOTOS
KODAK CONTACT PAPER
TAPE (if resold)
Purchases of items, which are not considered prepress preparation materials and are consumed by a printer in the performance of print jobs, are subject to sales or use tax. Examples of such items include, but are not limited to, the following:
DISKS AND DAT TAPES
FILM / PLATE DEVELOPER
FILM DEVELOPING FINISHER
KODAK CONTROL STRIPS
REGISTER PINS / PUNCHES
TONER CARTRIDGES **
** TONER WHEN PURCHASED IN BULK FOR THE PRODUCTION OF HIGH SPEED COPIES FOR RESALE WOULD BE EXEMPT UNDER THE WHOLESALE EXEMPTION.
ABC Print Shop,
RELATED TAX GUIDE TOPICS
Graphic Design and Composition
* DRMC Section 53-24(16) Definitions – Prepress Preparation Material - Sales
* DRMC Section 53-24(18) Definitions – Purchase Price - Sales
* DRMC Section 53-25(1) Imposition of Tax - Sales
* DRMC Section 53-26(17) Exemptions – Prepress Preparation Material - Sales
* DRMC Section 53-95(17) Definitions – Prepress Preparation Material - Use
* DRMC Section 53-95(19) Definitions – Purchase Price - Use
* DRMC Section 53-96(1) Imposition of Tax - Use
* DRMC Section 53-97(18) Exemptions – Prepress Preparation Material – Use
THE ABOVE INFORMATION IS A
SUMMARY IN LEYMAN’S TERMS OF THE RELEVANT