Which manuscript word-processing charges were taxable for keyboarding, drafts, final copies, carbon copies, photocopies, typesetting codes, and diskettes?
Apply this to your situation
This page answers the general question as of 1982. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
California addressed four word-processing arrangements for authors and publishers.
Charges for keyboarding a manuscript, printing drafts, editing, and printing the final original copy were nontaxable. Carbon copies made at the same time as the original were also nontaxable, but separately produced photocopies were taxable.
Preparing coded information on a diskette and giving it to a typesetter was taxable even when the same or a compatible used diskette was later returned to the provider.
When an author took the stored manuscript diskette, the charge for the diskette was taxable.
When a self-publishing poet received only an ordinary paper printout that a typesetting computer could scan, and the provider kept the diskette for reuse, the charge was not taxable. Transferring the diskette to the customer would make that property charge taxable.
What this means for you
Writers, editors, and production services
The source distinguished original manuscript services from later duplication and from transferring reusable machine-readable media.
Accountants and tax professionals
Track original copies, simultaneous carbon copies, later photocopies, coding work, disk ownership, disk transfer, OCR-ready output, and digital delivery separately.
Common questions
Q: Were manuscript keyboarding and editing taxable?
A: No.
Q: Were photocopies taxable?
A: Yes.
Q: Was coded output on a diskette taxable if the disk came back?
A: Yes.
Q: Was an OCR-readable paper printout taxable when the provider kept the diskette?
A: No.
Source
- Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
- Annotation page: Annotation 515.1435
- Original supporting opinion: 515.1435 PDF
Original ruling text
515.1435
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
(916) 445-3237
October 6, 1982
REDACTED TEXT
Dear REDACTED TEXT,
This is in reply to your letter of September 3, 1982. You have requested additional information concerning the correct application of tax to your word processing activities. Specifically, you would like to know the correct application of tax under the following circumstances:
- You keyboard (type) and print out a manuscript for an author to send to a publisher in
the hope of getting it accepted for publication. Does tax apply to the $1,000 charge to make to the author? Any charges made by you for keyboarding the manuscript, printing out a draft copy, editing, or printing out a final copy are nontaxable. If carbon copies are prepared at the time of the original copy, they are nontaxable. If any photocopies are prepared, they are taxable. - After a period of time has elapsed, a publisher is found to take a chance on the above
author, and decided he wants you to insert codes for the typesetter from the diskette containing the manuscript which you have stored in your office. It might take you a total of three hours, at
$15 per hour, to insert minor codes within the text for paragraph indentation, ellipses, words to be set in boldface and italics, etc. The typesetter then does his coding according to the publisher’s book design for type sized and faces, chapter heads, subheads, page numbers and any other “fancy” type, using what is stored on your diskette for the main body of the text, after which he returns your diskette, or another compatible used diskette, to you. (Your original “stock” of 24 brand-new diskettes can be used over and over ad infinitum.) Does your billing to the publisher include tax, even though your diskette containing the rest of the manuscript is used for typesetting? Your charges for preparation of coded information on a diskette, which is given to a typesetter and used to set type, are taxable even though the actual diskette or a similar one may eventually be returned to you.
REDACTED TEXT
-2-
515.1435
- The author in Example 1 takes a diskette with him. You charge $1,000 for the
manuscript and $10 plus tax for the diskette?
Correct, tax will apply to the charges made for the diskette. - A poet wants to self-publish his work. To cut down on expenses, at the same time you
keyboard (type) the manuscript, you code it in basically the way described in Example 2, and give the poet a printout from your OCR wheel that can be scanned by typesetting computer. (You keep the diskette to use over on some other project.) The poet takes these normal lettersize pieces of paper, which very much resemble an ordinary manuscript printout, to a typesetter, who then codes headlines, etc., as in Example 2, from the sheets scanned on his/her typesetting computer. Does your charge include tax? Tax would not apply to your charges in this instance. Tax will apply if you transfer the diskette to your customer. If you have further questions concerning this matter, please write this office again. Very truly yours, Mary C. Armstrong Staff Counsel MCA:jlc bc: Oakland – District Administrator
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