Was varityped copy nontaxable as a reproduction proof when it was physically incorporated into a paste-up sold for producing printed matter?

Plain-English summary

The letter distinguished varityped copy used as a reproduction proof from the same copy incorporated into a paste-up.

A direct proof, copy, likeness, or photographic image of type set by a typesetting process and used exclusively for reproduction was treated as a reproduction proof. Furnishing that varityped proof was a nontaxable service under the historical guidance described.

Advertising agencies and commercial artists, however, were retailers of paste-ups they produced and sold for use in making printed matter.

When the varityped copy was physically incorporated into such a paste-up, the entire paste-up charge was taxable, including the portion attributable to producing the copy.

What this means for you

Typographers

Document whether you deliver a standalone reproduction proof or contribute copy that becomes part of a larger property sale.

Advertising agencies and commercial artists

The tax treatment of a type-composition service can change when its output is physically incorporated into a paste-up you sell.

Accountants and tax professionals

Trace the physical deliverable and exclusive reproduction use rather than assuming every typography charge receives the same treatment.

Common questions

Q: Was standalone varityped reproduction copy taxable?

A: The letter treated it as a nontaxable service when used exclusively as a reproduction proof.

Q: What changed when the copy entered a paste-up?

A: The agency or artist sold the paste-up as tangible property with the copy physically incorporated.

Q: Was only the paste-up material taxable?

A: No. The entire charge, including the copy portion, was taxable.

Q: Did the paste-up have to be the final printed matter?

A: No. It was sold for use in producing printed matter.

Citations and references

• Historical Sales and Use Tax Rulings 2 and 24
• Historical Business Taxes General Bulletin 62-3
• Historical California Tax Service Annotations 1688.20 and 1688.40

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 100.0220
• Original supporting opinion: 100.0220 PDF

Original ruling text

100.0220

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

May 11, 1967

Dear Mr. ---:
Mr. Robert S. Goldflam of our San Mateo office has asked us to reply to your inquiry concerning the application of sales tax with respect to charges made for varityping copy to be used in printing. Under sales tax Ruling 24, the furnishing of reproduction proofs to typographers for use I making printing media is regarded as a nontaxable service. A reproduction proof is defined in Business Taxes General Bulleting 62-3, as a direct proof, copy, likeness, or photographic image of type set by any typesetting process, and used exclusively for reproduction purposes. This definition has been interpreted by this Board to include copy produced by varityper which is used as a reproduction proof in the production of printed matter. The foregoing is the basis of California Tax Service Annotation No. 1688.20, which states that tax does not apply to varityping charges in the production of “reproduction proofs”. Under sales tax Ruling 2, advertising agencies and commercial artists are regarded as retailers of paste-ups which they produce and sell to others for use in the production of printed matter. When copy is produced by means of the varityper, and is physically incorporated into such a paste-up, the entire charge for the paste-up, including the portion attributable to the copy, is subject to tax. This is the kind of situation to which California Tax Service Annotation 1688.40 properly refers. Very truly yours,

George A. Trigueros
Associate Tax Counsel

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