Were weekly printed job-status reports prepared from a contractor's own information taxable when they also contained incidental safety topics or jokes?
Apply this to your situation
This page answers the general question as of 1984. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
A provider offered contractors and other businesses a weekly "time value reminder service." It turned customer-furnished project information into printed job-status reports used to coordinate work.
California treated the provider as performing a service rather than selling tangible personal property. The weekly report was based on each customer's information and supported project coordination.
Adding incidental material that the customer had not specifically requested, such as a safety topic or a joke, did not turn the service into a taxable sale.
What this means for you
Custom reporting providers
Customer-specific reports built from the client's own project data supported service treatment even though the result was printed.
Accountants and tax professionals
Distinguish custom processing of customer information from sales of standardized reports, publications, templates, or multiple copies.
Common questions
Q: Were the weekly status-report charges taxable?
A: No.
Q: Did including a safety topic make the report taxable?
A: No.
Q: Did including a joke make the report taxable?
A: No.
Source
- Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
- Annotation page: Annotation 515.1370
- Original supporting opinion: 515.1370 PDF
Original ruling text
515.1370
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
916/445-6493
May 14, 1984
Mr. P--- L. W--XXX --- -----, CA XXXXX
No Permit
Dear Mr. W---:
Your letter of April 2, 1984, has been referred to me for reply. You ask whether the “service” you provide your clients is subject to tax. We understand that you offer a “time value reminder service” to contractors and to other business entities whereby you provide your client, on a weekly basis, printed job status reports which are based on customer furnished information. Apparently these reports are used as an aid in the coordination of various projects by the contractor. You state that the reports might also include some incidental information such as a safety topic or joke. California Sales and Use Tax Law imposes a tax on the sale or use of tangible personal property in this state, unless the sale or use is otherwise exempt from taxation. Tax does not apply, however, to charges for the performance of a service if there is no “sale” of tangible personal property. We have reviewed the enclosed sample copy of a typical report which you issue to your customers. It is our opinion that you are providing a service rather than selling tangible personal property when you furnish your clients such written reports. The incidental inclusion of information in the report which is not specifically requested by the customer such as a joke would not result in a taxable sales transaction. Therefore, your charges for the time value reminder service are not subject to sales or use tax. If you have any further questions, please write this office. Very truly yours,
Charles J. Graziano
Tax Counsel
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