Did a 1997 opinion treat duplicating 500 to 600 electronic press-kit tapes from a completed studio master as qualified production services?

Plain-English summary

In 1997, a video duplicator made 500 to 600 copies of each electronic press kit from a completed studio master. The tapes contained interviews and movie clips with blank spaces that local television stations could use to add reviewers and customize presentations.

The 1997 memorandum concluded that the duplicator did not perform work in producing the press kit. It characterized the work as manufacturing duplicate tapes for exhibition or broadcast, which section 6010.6(b)(4) excluded from qualified production services.

That conclusion is no longer a safe statement of the agency's published position. In official Annotation 375.0057 dated April 8, 2004, California expressly said Annotation 375.0783 was inconsistent and would be removed. The later opinion treated EPK duplication as nontaxable qualified production services when further sound editing, color correction, or other work was genuinely required before broadcast, while warning that broadcast-ready copies remained taxable.

CDTFA's freshly fetched 2026 collection and individual page still publish Annotation 375.0783, so the promised removal cannot be treated as completed.

Source and live-annotation limits

The memorandum does not reproduce the December 20, 1996 request. It quotes factual passages from a November 22, 1996 Culver City audit-staff memorandum but does not reproduce that document in full. It does not identify the taxpayer or its studio and television-station customers, and it supplies no account number, master, duplicated tape, shipping record, editing record, broadcast, contract, charge, invoice, books and records, audit workpaper, assessment, completed transaction, or later audit outcome. Counsel expressly asked staff to obtain the missing account number.

The live annotation preserves the press-kit format and contents, copy volume, completed-studio-master premise, intended station editing, exhibition-or-broadcast characterization, section 6010.6(b)(4) quotation, and no-qualified-services result. It omits the ongoing audit, internal memorandum chain, named recipient, Tom Cruise and Mission Impossible example, missing account-number instruction, missing evidence and later outcome. The live entry also omits the later 375.0057 disapproval and remains published despite that opinion's promised removal.

What this means for you

Studios, duplicators, and tax professionals

Do not rely on the 1997 conclusion alone. Document whether duplicated press kits are actually broadcast-ready or require substantive post-production before exhibition or broadcast.

Common questions

Q: What did the 1997 memorandum conclude?

A: It treated them as duplicate tapes for exhibition or broadcast and excluded the work from qualified production services.

Q: Does that remain the agency's unqualified position?

A: No. Annotation 375.0057 expressly disapproved the earlier conclusion.

Q: What fact controls under the later opinion?

A: Whether the copies genuinely require further editing or correction before broadcast.

Citations and references

• California Revenue and Taxation Code § 6010.6(b)(4)
• December 20, 1996 request memorandum — described but not included
• November 22, 1996 Culver City audit-staff memorandum — quoted but not included in full
• Taxpayer account number, identity, audit records, contracts, charges, tapes, uses, and later outcome — requested, described, or assumed but not documented
• California Sales and Use Tax Regulation 1529 and Annotation 375.0057 — applied in the later official opinion

Verbatim support

From the official January 21, 1997 memorandum:

The facts do not show the taxpayer performs any work in connection with the production of the press kit. The studio which provides the press kit master to the taxpayer has completed production of the press kit. The taxpayer merely manufactures duplicate tapes for exhibition or broadcast by the television stations.

From the official April 8, 2004 opinion:

I see that Annotation 375.0783 (1/21/97) is inconsistent with the opinion expressed herein. I will have it removed from the Business Taxes Law Guide.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 375.0783
• Original supporting opinion: 375.0783 PDF
• Later official opinion disapproving this conclusion: 375.0057 PDF

Original ruling text

State of California

Board of Equalization
Legal Division-MIC: 82

Memorandum

375.0783

Mr. J. W. Cornelius, Supervisor
Audit Evaluation and Planning
MIC:40

Date:

From :

Ronald L. Dick
Senior Tax Counsel

Telephone:
CalNet :

Subject:

Electronic Press Kits

To :

January 21,

1997

(916) 445-6450
(8) 485-6450

This is in reply to your December 20, 1996 memorandum regarding the application of sales tax to charges by a video duplicator. A November 22, 1996 memorandum sent by the audit staff of the Culver City office to the Program Planning Manager regarding this case notes the following facts: “Currently we are auditing the books and records of a video duplicator. Taxpayer manufactures copies of electronic press kits (usually 500 - 600 video tapes per customer), from a master provided by a movie studio, and ships them to television studio (sic) through out the country. “Electronic press kit is either a 3/4 or 1/2 inch video tape prepared by movie studios prior to the release of a new film. The tape will consist of several interviews with the star or co-stars and various clips from the movie. There are gaps or blank time spots between every interview and movie clip. These gaps are left intentionally so that local TV stations will be able to impose their film reviewer to the tape, edit and customize the tapes as they wish prior to the broadcast. For example, a movie reviewer for NBC might use part of one of the interviews with Tom Cruise and 60 seconds clip from the movie Mission Impossible in his or her presentation to the TV audience. The taxpayer receives a completed master and then manufactures 500 to 600 copies which are shipped throughout the nation.”

Mr. J. W. Cornelius

-2-

January 21, 1997
375.0783

Given this information, you asked for our opinion as to whether the copies of the press kits are the product of qualified production services provided by the taxpayer. Revenue and Taxation Code section 6010.6 provides that “sale” and “purchase” do not include the performance of qualified production services in connection with the production of all or any part of any qualified motion picture. Subdivision (b)(4) of section 6010.6 defines “qualified production services”: “‘Qualified production services’ means any fabrication performed by any person in any capacity (whether as an employee, agent, independent contractor, or otherwise)on film, tape, or other audiovisual embodiment in connection with the production of all or any part of any qualified motion picture, including, but not limited to photography, sound, music, special effects, animation, adaptation (language, media, electronic, or otherwise), technological modifications, computer graphics, dubbing, mixing, editing, or cutting services. ‘Qualified production services’ do not include services or other work to manufacture release prints or to duplicate tapes for exhibition or broadcast.” We do not believe that the taxpayer provides qualified production services to the studio “in connection with the production of all or any part of” the electronic press kits. Rather, subdivision (b)(4) of section 6010.6, quoted above, appears to be on point. The statute specifically excludes from the “qualified production services” definition “services or other work to manufacture release prints or to duplicate tapes for exhibition or broadcast.” The facts do not show the taxpayer performs any work in connection with the production of the press kit. The studio which provides the press kit master to the taxpayer has completed production of the press kit. The taxpayer merely manufactures duplicate tapes for exhibition or broadcast by the television stations. Please obtain the account number of the taxpayer in question. Please also inform the district office of the need to always provide the account number when requesting an opinion, so we can properly document the taxpayer’s file.

RLD:sr