Did each short advertising audiocassette qualify as a master recording even when many copies were produced?

Plain-English summary

California said each audiocassette produced for qualifying advertising use could be treated as a master tape embodying sound, rather than limiting master status to the single source tape from which copies were made. The described cassettes ran about two to ten minutes and advertised clients' products or services.

For qualifying tapes, the taxable measure was limited to the sale price of the unprocessed blank tape under Regulation 1527(b)(2).

Common questions

Did only the original source tape qualify?

No. Each tape produced for a listed qualifying use could qualify.

What uses did the regulation list?

Radio commercials, other advertising, syndicated radio programs, and educational purposes.

What amount remained in the tax measure?

The sale price of the blank tape.

Citations and references

• California Sales and Use Tax Regulation 1527(b)(1) — master-tape definition quoted and applied
• California Sales and Use Tax Regulation 1527(b)(2) — blank-media taxable measure applied

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/527-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/527-0050.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. Jesse Ducay
Audit Evaluation and Planning

From:

Ronald L. Dick
Senior Tax Counsel

527.0050

Date:

June 28, 1991

Subject:

This is in reply to the April 25, 1991 Mini-Memo from Mr. Vic Anderson regarding the application of sales tax to charges by __ for audiocassettes. From the material attached to Mr. Anderson’s memorandum, we understand that _ produces the audiocassettes for clients to advertise products or services of the clients. The audiocassettes play for approximately two to ten minutes. Mr. Anderson asked for our opinion as to whether each of the tapes qualifies as “master tapes and master records embodying sound” as defined in Sales and Use Tax Regulation 1527, Sound Recording. Subdivision (b)(1) of Regulation 1527 provides: “Master tapes and master records embodying sound” means tapes, records, and other devices, not including mothers, stampers or finished records, utilized by the recording industry in making recordings embodying sound. The term includes, but is not limited to tapes or records which are produced for the immediate purpose of auditioning or demonstrating the particular artistic talents contained therein. The term includes tapes or records which are produced for us as radio commercials or other advertising, syndicated radio programs or for educational purposes. The term does not include recordings for video games or seismic surveys. We have previously taken the position that, under the wording of the regulation, each of the tapes produced for use as radio commercials, other advertising, syndicated radio programs, or educational purposes qualifies as a master tape embodying sound rather than only the master from which such tapes are produced. Accordingly, the measure of tax on ___ sales of the tapes it produces for the clients is limited to the sale price of the unprocessed recording medium (blank tape). (Reg. 1527, subd. (b)(2).) If you have any further questions on this, feel to contact me directly.