Was a graphic designer's separately charged press-check service taxable when the client separately contracted with the printer?

Plain-English summary

A graphic designer sold final art to a client, while the client separately hired a printer. The designer also offered an hourly “press check” to approve the print run's color and shading before the printer completed the full run.

The Legal Department concluded that the press-check charge was not taxable under the stated assumptions. The service was truly optional, so it was not part of the designer's sale of final art.

The designer also merely approved or rejected the output and did not direct or supervise the printer's method. That distinction mattered because supervision of fabrication or printing can itself constitute a taxable sale under section 6006.

What this means for you

Graphic designers

An optional quality review may be treated separately from the sale of final art, but the work performed must match the limited approval role described in the opinion.

Printers and clients

Separate contracts supported the analysis: the printer sold the completed printing, while the designer billed the client only for the optional review.

Accountants and tax professionals

Confirm both independence and scope. A mandatory press check or one involving direction of the fabrication process could produce a different result.

Common questions

Q: Was the designer's optional press-check fee taxable?

A: No, under the opinion's assumptions.

Q: Why was it separate from the finished-art sale?

A: The client had no obligation to buy the press check.

Q: Could supervision of the printer be taxable?

A: Yes. The opinion assumed the designer did not direct or supervise how the printer achieved the desired output.

Q: Could the unidentified client rely on this opinion under section 6596?

A: No.

Citations and references

• California Revenue and Taxation Code §§ 6006(b), 6006(f), 6012, 6051, and 6596

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 100.0034.360
• Original supporting opinion: 100.0034.360 PDF

Original ruling text

100.0034.360

STATE OF CALIFORNIA

JOHAN KLEHS
First District, Hayward

STATE BOARD OF EQUALIZATION
450 N STREET, SACRAMENTO, CALIFORNIA
(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
TELEPHONE (916) 324-2655
FAX (916) 323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles

November 5, 1996

KATHLEEN CONNELL
Controller, Sacramento
___
E. L. SORENSEN, JR.
Executive Director

K--- M--A--- S--- T--C--- Incorporated
XXXX --- Road, Suite XXX
---, CA XXXXX
Re:

Unidentified Taxpayer

Dear K--- M---:
This is in response to your letter dated September 26, 1996, in which you ask whether a designer’s charges for a “press check” are subject to tax. You state: “A graphic designer (designer) enters into a contract with a client that provides for the fabrication and sale of final art. The client also enters into a separate contract with a printer for the actual printing of the printed matter. Upon completion of the final art by the designer, the designer delivers the final art to the printer, or to the client for redelivery to the printer. “The designer has also agreed to perform a service for the client that is commonly known in the printing industry as a ‘press check’. This service consists of the designer approving the print run prior to the completion of the full run in order to insure that the final output is optimal in terms of color and shading. The designer charges the client, not the printer, an hourly rate for providing this service.

K--- M---

-2-

November 5, 1996
100.0034.360

“The ‘press check’ is not a required process in the completion of the printed material and is offered as an optional service by the designer for the convenience of the client. Furthermore, the designer is not the seller of the printed material; rather, the printer is under separate contract with the client to fabricate and furnish the completed printing.” As you know, the gross receipts from retail sales of tangible personal property in California by a retailer are subject to tax. (Rev. & Tax. Code § 6051.) The “gross receipts” is the total amount of the sale price. (Rev. & Tax. Code § 6012.) Sales tax does not apply to the providing of a service which is unrelated to the sale of tangible personal property and which does not itself constitute a sale of tangible personal property. (See Rev. & Tax. Code § 6006(b),(f).) We understand that the “press check” performed by the designer is truly an optional service offered to the client. That is to say, the client is in no way obligated to purchase this service in connection with the designer’s sale of the final art. Since the “press check” is truly optional it is not regarded as a service part of that sale. The remaining question is whether the “press check” itself constitutes a sale. Under certain circumstances, supervision of the fabrication or printing process constitutes a sale under subparagraph (b) or (f) of section 6006. For purposes of this opinion, we assume that the designer simply approves or disapproves the printing and in no way directs or supervises the manner in which the printer obtains the optimal results sought by the customer. Since the press check is optional and thus not part of the sale of the final art, and the press check is not a sale based on the assumption above, the designer’s charges for the press check are not taxable. As you know, this opinion does not come within the provisions of Revenue and Taxation Code section 6596 since you have not provided the identity of your client. If you have any further questions in regard to this matter, please do not hesitate to write again.

Yours very truly,

Anthony I. Picciano
Tax Counsel

AIP:cl
cc:

--- District Administrator