Were a freelance technical writer's charges taxable when original manuals were delivered as printed manuscripts, computer diskettes, or both?
Apply this to your situation
This page answers the general question as of 1986. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
A freelance technical writer described three arrangements: working through an agency and delivering a printed manual plus diskettes, working directly for a customer and delivering only a printed manuscript, and working directly for a customer and delivering both a manuscript and diskettes containing word-processing files.
California treated all three as nontaxable services of writing original text. Delivering the original work on paper, diskettes, or both did not change the result.
The opinion distinguished original writing from taxable sales of original artwork, illustrations, and graphic designs. It also said that charges for multiple printed copies or multiple diskettes would be taxable.
The writer was the consumer of the paper and diskettes used to perform the service, so tax applied when the writer bought those materials.
What this means for you
Writers and content developers
The source focused on original authorship rather than the physical medium used to deliver the first manuscript or files.
Accountants and tax professionals
Separate original writing from artwork, design, standardized content, extra copies, storage media, printing, and other transferred property.
Common questions
Q: Was an original printed manuscript taxable?
A: No.
Q: Did delivering the files on diskettes make the writing taxable?
A: No.
Q: Were multiple copies taxable?
A: Yes.
Q: Who owed tax on the paper and diskettes used for the original work?
A: The writer as consumer.
Citations and references
- California Sales and Use Tax Regulations 1501 and 1502.1(a)
Source
- Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
- Annotation page: Annotation 515.0366
- Original supporting opinion: 515.0366 PDF
Original ruling text
515.0366
(916) 445-6493
December 12, 1986
REDACTED TEXT
Work processing – transfer of original text on diskettes
Dear REDACTED TEXT,
In your October 17, 1986 letter to the Board’s legal staff, you relate that you are a free-lance technical writer, and you want to know whether or not you have to pay sales tax in any of the three situations under which you work. In summary, you relate that first, sometimes you work through a writing agency which contracts with its customer, and you contract with the agency. You write an instruction manual on word processing equipment and turn over printed copy and diskettes to the agency. Second, sometimes you work directly for a customer, and turn over a printed manuscript only. Third, sometimes you work directly for a customer and turn over both a printed manuscript and diskettes containing your word processing files. Your customer uses the diskettes to format your word processing files so the files can be printed. The customer may format the files in various ways, such as adding blank lines so art work can be pasted in. After these files are formatted, the customer sends the manuscript to a printer. Opinion Our opinion is that tax does not apply to your charges to your customers under any of the three situations you describe. Our view is that you are providing a service of writing original text for your customers, which is non-taxable under the Board’s Regulation 1502.1(a). It makes no difference whether your original text is transferred to your customers in the form of printed copy or on diskettes. In contrast to sales of original artwork, illustrations, and graphics designs, which are taxable transactions whether computer-generated or not, the writing of original text has long been considered as an exempt service transaction. See Regulation 1501. Accordingly, since you are the consumer of paper and diskettes which you use in performing your services, tax applies to your purchases of these items. However, please note that tax would apply to multiple copies of either the printed copy or diskettes which you may transfer to your customers. Regulation 1502.1(a). I enclose a copy of Regulations 1501 and 1502.1 for your information. Please feel free to contact me if you have any further questions or comments about this letter. Sincerely,
JGA:jb
Enclosures
bc: Mr. Les Sorensen
John Abbott
Tax Counsel
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