Did monthly Bechtel Briefs qualify as an exempt periodical, and were a commercial artist's reproduction-art charges also exempt?

Plain-English summary

An absent November 4 request asked about Bechtel Briefs and commercial artwork. California reviewed a copy of the monthly publication, which redacted company X distributed to clients and employees.

Associate Tax Counsel George A. Trigueros concluded that Bechtel Briefs qualified as an exempt periodical under former section 6362 and Sales Tax Ruling 50.

The redacted requester was an artist who designed layouts, cropped photographs, specified type, and performed related work for the publication.

The publication's treatment did not exempt the artist's tangible work. Ruling 2 paragraph (C) applied tax to the entire commercial-artist charge for drawings, paintings, designs, photographs, lettering assemblies, printed matter, and similar tangible property, whether used for reproduction or display. The artist's Bechtel Briefs reproduction-art charges were therefore subject to sales tax.

Later authority and source limits

A February 5, 2002 official staff email published with Annotation 385.0920 warns that, under then-current section 6362.7 and Regulation 1590, periodicals were no longer exempt unless sold by subscription and delivered by mail or common carrier, or covered by another exemption such as nonprofit distribution. The 1965 letter supplies no later-law facts, and that warning does not itself alter the separate artwork holding.

The official 385.1320 PDF does not include the November 4 request, Bechtel Briefs copy or any issue, publication or delivery schedule beyond “monthly,” company X, clients or employees, artist identity, layout, photographs, type specification, drawings, paintings, designs, lettering assemblies, printed matter, reproduction or display use, artist or publishing agreement, charges or invoices, sales, returns, exemption documentation, tax calculations or payments, audit, assessment, claim, appeal, or outcome. The parties, recipients, artwork, transactions, and amounts are redacted or unidentified.

The live annotation preserves Bechtel Briefs, monthly publication, client and employee distribution, section 6362, and exempt-periodical result. It omits the November 4 request and reviewed copy, company X, Ruling 50, artist and work, Ruling 2 paragraph (C), tangible-artwork categories, reproduction/display scope, entire-charge and taxable-artwork conclusions, later 2002 warning, missing records, redactions, and absent outcome.

What this means for you

Publishers, commercial artists, and tax professionals

Classify the publication separately from every production input. Preserve every issue, publication and delivery schedules, recipients, artwork and production records, reproduction or display use, artist and publisher contracts, charges, invoices, sales, returns, exemption records, tax calculations, and payments.

Common questions

Q: Did Bechtel Briefs qualify as a periodical?

A: Yes.

Q: Were the commercial artist's charges exempt too?

A: No. The opinion treated the entire charge for the described tangible artwork as taxable.

Q: What work did the artist perform?

A: Layout design, photo cropping, type specification, and related reproduction-art tasks.

Q: Did the live annotation include the artwork ruling?

A: No. It publishes only the periodical conclusion; the supporting opinion contains the separate taxable-artwork holding.

Citations and references

• Former California Revenue and Taxation Code § 6362
• Former California Sales Tax Rulings 2 and 50
• California Revenue and Taxation Code § 6362.7 and Regulation 1590 — discussed in the February 5, 2002 staff email published with Annotation 385.0920
• Request, publication and issues, distribution, artwork and production records, contracts, charges, invoices, tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Associate Tax Counsel letter:

We have examined the copy of Bechtel Briefs, a monthly publication, which is distributed by "X" to its clients and employees.

tax applies to the entire amount charged to clients by commercial artists for items of tangible personal property such as drawings, paintings, designs, photographs, lettering assemblies and printed matter, whether the items of property are used for reproduction or display.

Accordingly, your charges for such art work for reproduction in Bechtel Briefs are subject to sales tax.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.1320
• Original supporting opinion: 385.1320 PDF

Original ruling text

385.1320

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 8, 1965

Gentlemen:
This is in reply to your letter of November 4.
We have examined the copy of Bechtel Briefs, a monthly publication, which is distributed by "X" to its clients and employees. In our opinion, Bechtel Briefs qualifies as an exempt periodical under Section 6362 of the Revenue and Taxation Code and Sales Tax Ruling 50. It is our understanding that you are an artist and do layout design, crop photos, specify type, etc., for Bechtel Briefs. As indicated in paragraph (C) of Ruling 2, tax applies to the entire amount charged to clients by commercial artists for items of tangible personal property such as drawings, paintings, designs, photographs, lettering assemblies and printed matter, whether the items of property are used for reproduction or display. Accordingly, your charges for such art work for reproduction in Bechtel Briefs are subject to sales tax.

Very truly yours,

George A. Trigueros
Associate Tax Counsel

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