Did pulling progressive and finished proofs or insurance Scotchprints before outside shipment create taxable use of the photoengravings?

Plain-English summary

The district administrator identified as JWT for "Los Ageles District"—the official PDF's spelling—submitted information to Headquarters Tax Counsel about a redacted photoengraver. The submission itself is absent.

The engraver made photoengravings for advertising agencies for delivery to outside-state publications. Before shipment, it pulled progressive proofs, finished proofs and Scotchprints from the plates and furnished them to California advertising agencies.

The progressive and finished proofs were for agency inspection and approval. Scotchprints were high-quality insurance proofs from which acceptable duplicate plates could be made by a simplified process if the originals were lost or, as the source prints it, "mutiliated."

The GAT-attributed counsel memorandum found that pulling the progressives, "finished prints" and Scotchprints did not constitute taxable use of the photoengravings. Its shift from "finished proofs" in the facts to "finished prints" in the conclusion is preserved rather than harmonized.

A separate charge produced a different result. If the photoengraver separately charged for the progressives, finished prints or Scotchprints, that charge was taxable. The live annotation adds that the engraver was the retailer of separately stated proofs and prints.

No statute, regulation or case is cited, and the source documents no actual order, plate, proof, approval, shipment, charge, tax amount or later proceeding. The live annotation publishes the core result but omits the district provenance and source-language variations.

Common questions

Did making inspection and approval proofs use the engravings taxably?

No. Counsel found that pulling and furnishing progressive and finished proofs did not create taxable use of the photoengravings.

What were the Scotchprints for?

They were high-quality insurance proofs from which duplicate plates could be made by a simplified process if the original plates were lost or damaged.

Were the proofs themselves always untaxed?

No. The engraving-use answer was separate from the charge: counsel said any separately stated charge for progressives, finished prints or Scotchprints was taxable.

Did the PDF call the engraver a retailer of the proofs?

Not expressly. The PDF says the separate charge is taxable; the live annotation adds that the engraver is the retailer of those proofs and prints.

Was the underlying district report published?

No. The memorandum says it reviewed submitted information but gives no date, report, attachments or transaction records.

Does the source identify the out-of-state publications or shipments?

No. It supplies no publisher, destination, order, carrier document or delivery proof.

Citations and references

• District-submitted photoengraving information — reviewed but not reproduced
• Progressive/finished proofs and Scotchprints — described by purpose without underlying records
• July 7, 1966 Headquarters Tax Counsel memorandum — no-use holding and separate-charge tax result without cited law
• Official Annotation 325.1000 — adds retailer treatment and standardizes source wording

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.1000
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-1000.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Los Ageles District – District Administrator (JWT)

From:

Tax Counsel (GAT) - Headquarters

325.1000

Date:

July 7, 1966

Subject:

We have reviewed the information which you have submitted regarding the photoengravings which --- makes for advertising agencies for delivery to out-of-state publications. It is our understanding that prior to shipment, --- pulls progressive proofs, finished proofs, and Scotchprints from the plates and furnishes them to the advertising agencies in this state. The progressive and finished proofs are furnished to the agencies for their inspection and approval. The Scotchprints are high quality proofs from which acceptable duplicate plates could be made by a simplified process if the original plates were lost or mutiliated. They are furnished to the advertising agencies for insurance purposes. In our opinion, the pulling of such progressives, finished prints, and Scotchprints is not taxable use of the photoengravings. If the photoengraver makes a separate charge for the progressives, finished prints, or Scotchprints, the charge therefor will be subject to tax.

GAT :mm