Were architects' design drawings and blueprints taxable, and how did California distinguish original design from drafting another person's specifications?

Plain-English summary

California distinguished original architectural or engineering design from manual drafting of another person's ideas.

Fees for conceiving and dictating ideas, concepts, designs, and specifications were nontaxable services. A draftsperson paid only to put customer-supplied details on paper made taxable drawings because the customer sought the drawing itself.

The 1988 opinion addressed an unlicensed architectural draftsperson performing work equivalent to an architect under licensed architects' direction and approval. Working drawings that embodied the provider's accepted design were treated as architectural design rather than taxable blueprints.

Even if those working drawings were blueprints, copies required by the original contract or commission were incidental to the nontaxable service. Additional blueprint copies furnished later and not required by the original agreement were taxable.

The 1965 opinion had broadly said that architects' or engineers' sales of blueprints made from original drawings were taxable. The 1988 opinion explains the later interpretation allowing the blueprints called for in the original commission.

What this means for you

Architects, engineers, and drafters

Who originated the design and whether a copy was required by the original commission mattered more than the provider's job title alone.

Accountants and tax professionals

Document design responsibility, licensing and supervision, original-contract deliverables, reproduction services, and later extra-copy orders.

Common questions

Q: Were original architectural design fees taxable?

A: No.

Q: Were blueprints required by the original commission taxable?

A: The 1988 opinion treated them as incidental and nontaxable.

Q: Were later additional blueprint copies taxable?

A: Yes.

Q: Were drawings made solely from customer specifications taxable?

A: Yes.

Citations and references

• California Sales and Use Tax Regulation 1501
• Business Taxes Law Guide Annotation 515.0380
• Albers v. State Board of Equalization, 237 Cal.App.2d 494 (1965)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 515.0380
• Original supporting opinion: 515.0380 PDF

Original ruling text

515.0380

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

December 14, 1965

Gentlemen:
This is in reply to your letter of December 1, 1965 inquiring concerning the application of sales tax to fees paid to architects and engineers, as well as to charges for blueprints. You mention the recent decision of Albers v. State Board of Equalization, 237 A.C.A 583. This case held a draftsman was subject to tax, and the basis for the court’s decision is set forth in the following paragraph taken from the opinion. “Plaintiff herein was not paid to conceive or to dictate any of the ideas, concepts, designs, or specifications in the drawings made by him. He simply applied his ability to the details supplied by the customer for the purpose of putting such details down on paper and thereby producing a drawing for use by the customer. In other words, the customer was purchasing the detailed drawing for his use, he was not purchasing the design or specifications pictured in the drawing.” Plaintiff in this case was a commercial draftsman, but was neither an architect nor an engineer. Fees paid to architects or engineers for their ability to design, conceive, or dictate ideas, concepts, designs or specifications are not subject to the tax. If, in addition, they have blueprints made of their original drawings and sell these blueprints, the tax applies to the charge they make for the blueprints. When a reproduction service is used, the reproduction services total charges would be taxable. Of course, if a person who although an architect or engineer were paid solely for the manual work of producing the drawing from ideas, concepts, designs, or specifications furnished to him by the customer, his charges would be taxable the same as in the Albers case. Although the holding in the Albers case confirms the position we have consistently maintained, the decision is not yet final, as there was a petition for hearing in the Supreme Court. As far as we are aware, the Supreme Court has not yet acted to grant or deny this petition. Very truly yours,

E. H. Stetson
Tax Counsel

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515.0380

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-5550

April 25, 1988

Mr. R--- L. M---, Jr.
XXXX --- Drive
---, CA XXXXX
Re:

SR -- XX-XXXXXX

Dear Mr. M---:
We have previously written you regarding the application of sales tax to your activities as an architectural draftsperson in letters dated April 23, 1987 and May 28, 1987. You have been audited by our Oakland District audit staff, and a question has arisen regarding a statement made in our letter to you dated May 28, 1987. [This tp worked under direction and supervision of licensed architects, and did the same work as they did, subject to their approval]. Although you are not a licensed architect, you perform architectural work. We have previously concluded that we will treat your charges for activities equivalent to that of an architect as nontaxable services as provided by Regulation 1501. We have also concluded that we will treat as taxable sales your charges for any activities equivalent to that of a draftsperson as explained in Business Taxes Law Guide Annotation 515.0380 (12/12/65): “Fees paid to architects or engineers for their ability to design, conceive or dictate ideas, concepts, designs, or specifications are not subject to the tax. If, in addition, they have blueprints made of their original drawings and sell these blueprints, the tax applies to the charge they make for the blueprints.” We pointed out that, based on this annotation, the taxable portion of your charge also includes that portion attributable to your production of blueprints based on your own architectural concepts. Our audit staff explains that you present many different ideas in drawings for consideration by your customers. When your customers accept your designs, you prepare a working drawing which is your final presentation of the accepted design to your customers. This drawing is on tracing paper, to scale, drawn in pencil, and its borders may be in ink. Your customers then take these working drawings and use them to make working plans for use in construction. Our audit staff has asked us to clarify whether your working drawings are subject to tax as blueprints.

Mr. R--- L. M---, Jr.

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April 25, 1988
515.0380

As described by our audit staff, it appears that your working drawings are more equivalent to architectural design than blueprints, and if this is true your charges for them would not be subject to sales tax. Further, we have interpreted the annotation quoted above to allow as nontaxable the transfer by an architect of the blueprints called for in his or her original contract or commission. We will therefore treat your working drawings, even if properly regarded as blueprints, as part of your nontaxable service if they are called for in your original contract or commission. Of course, pursuant to the annotation quoted above, if you do furnish additional copies of blueprints that were not required by the original contract, sales tax would apply to the sale of those later copies. We hope we have finally resolved the sales tax issues involved in your business. However, if you do have further questions, feel free to write us again. Sincerely,

David H. Levine
Tax Counsel

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