Were a calligrapher's handlettered works taxable even when the business earned little, and did the calligrapher need a seller's permit?

Plain-English summary

California treated handlettered calligraphy as artwork whose physical form was the true object of the customer's contract. The work therefore was tangible personal property and its sale was taxable unless a specific exemption or exclusion applied.

The calligrapher's reported income of less than $1,900 over roughly two and one-half years did not create a small-seller exception. A seller's permit was required if the calligrapher made taxable sales.

The opinion identified possible exemptions for qualifying works of art bought for public display and for interstate or foreign commerce. If every sale qualified for the interstate-commerce exclusion, no seller's permit was needed. By contrast, making only exempt public-display art sales still required a permit.

Because the requester did not identify the client or disclose all relevant facts, the opinion was hypothetical general advice and did not qualify for reliance relief under Revenue and Taxation Code § 6596.

What this means for you

Calligraphers and lettering artists

Custom artistic labor did not prevent tax when the customer wanted the finished physical artwork.

Small creative businesses

Low receipts alone did not eliminate the seller-permit requirement under this opinion.

Accountants and tax professionals

Test each claimed exemption, distinguish all-interstate sales from public-display exemptions, and obtain fact-complete written advice when reliance protection matters.

Common questions

Q: Were calligraphy sales taxable?

A: Yes, unless a specific exemption or exclusion applied.

Q: Did low income eliminate the permit requirement?

A: No.

Q: What if every sale was shipped in interstate commerce?

A: The opinion said a permit would not be necessary if every sale qualified for that exclusion.

Q: What if every sale was exempt artwork for public display?

A: A seller's permit still was required.

Q: Could the unidentified client rely on this as statutory written advice?

A: No.

Citations and references

• California Revenue and Taxation Code §§ 6006(b) and (f), 6016, 6066, 6365, 6396, and 6596
• California Sales and Use Tax Regulations 1501, 1541(f)(4), 1586, 1620, and 1699
• Sales and Use Tax Annotations 410.0250, 410.0280, and 410.0300, as cited in the opinion

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 515.0002.820
• Original supporting opinion: 515.0002.820 PDF

Original ruling text

515.0002.820

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District

APPEALS REVIEW SECTION (MIC:85)
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-6592

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego

July 16, 1993
Dear REDACTED TEXT:

MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento
BURTON W. OLIVER
Executive Director

Re: Seller’s Permit for Calligrapher
This is in response to your letter of June 24, 1993, to Gary J. Jugum, Assistant Chief Counsel, wherein you requested our opinion regarding the necessity of your client who is a calligrapher to possess a California seller's permit under the Sales and Use Tax Law. Also, you request information on exemptions and exclusions applicable to calligraphers. Under Revenue and Taxation Code Section 6066,1 every person who wants to be engaged in business in California as a retailer of tangible personal property subject to sales tax must file an application with the State Board of Equalization for a seller's permit. A seller's permit is required for each place of business at which sales transactions are customarily negotiated with customers. Sales and Use Tax Regulation 1699(a).2 Section 6006 defines "sale" as including, but not limited to, the following: "(b) The providing, fabricating, processing, printing, or imprinting of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the producing, fabricating, processing, printing or imprinting.
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(f) A transfer for a consideration of the title or possession of tangible personal property which has been produced, fabricated, or printed to the special order of the customer, or of any publication." Section 6016 states that "'Tangible personal property' means personal property which may be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the senses." Regulation 1501 involves service enterprises and in pertinent part states: "The basic distinction in determining whether a particular transaction involves a sale of tangible personal property or the transfer of tangible personal property incidental to the performance of a service is one of the

1 All section references are to the Revenue and Taxation Code unless otherwise stated. 2 All further regulation references are to the Sales and Use Tax Regulations.

true object of contract; ... Tax would also apply to the sale of artistic expression in the form of paintings and sculptures even though the work of art may express an original idea since the purchaser desires the tangible object itself; that is, since the true object of the contract is the work of art in its physical form."

515.0002.820

Regulation 1541(f) (4) states that transfers of handlettering and other artwork are subject to tax. Clearly, calligraphy is tangible personal property because it can be seen. Although you indicate that your client has averaged less than $1,900 in income for the period from 1991 through June 23, 1993, the calligrapher has presumably been engaged in business in California during that time and has sold or leased the calligraphy. In our view, the calligraphy is a work of art and the physical form of the calligraphy is the true object of the contract. Thus, the calligrapher must obtain a seller's permit unless there is an applicable exemption or exclusion for all sales. Exemptions which may apply to calligraphers, if the requirements of the statutes and regulations are met, include the following: (1) Works of art and museum pieces for pubic display; (Section 6365; Regulation 1586); and (2) interstate and foreign commerce. (Section 6396; Regulation 1620). If the calligrapher had all sales fit into the aforementioned interstate commerce exemption, then it would not be necessary to obtain a seller's permit (See Regulation 1699(b)). Otherwise, a seller's permit is necessary, even if all other sales are exempt works of art for public display under Section 6365. (See Sales and Use Tax Annotations 410.0250, 410.0280, and 410.0300). For the benefit of the calligrapher, I have included the following two pamphlets published by the Board of Equalization: 1) Your California Seller's Permit, and 2) Sales and Use Taxes: Exemptions and Exclusions. Also, enclosed are Regulations 1586, 1620 and 1699. Section 6596 provides the only basis for relief from tax if a taxpayer relies on incorrect written advice from the Board. The primary conditions to qualify are that the request for opinion must be in writing and must disclose all relevant facts, including the identity of the taxpayer. Since you have not identified your client, or other relevant facts, this opinion does not come within the provisions of Section 6596 but rather is simply general advice regarding a set of hypothetical facts. We hope the above discussion has answered your questions. Our intention is to provide timely, courteous and helpful responses to inquiries such as yours. Suggestions that help us to accomplish this goal are appreciated. If you need anything further, please do not hesitate to write again. Very truly yours, Carl J. Bessent Staff Counsel CJB/md Enclosures