Ezel / Tax Rulings / CT
CT Ruling 91-4 Sales and Use Taxes 1991-02-05

Were literary-agent fees taxable Connecticut sales-agent services when agents helped authors place manuscripts with publishers?

Short answer: No. Literary agents represented authors in approaching publishers and were paid through retainers or commissions, but the manuscript was the author's intellectual product and was not tangible personal property under Conn. Gen. Stat. § 12-407(13). Because the sales-agent service in § 12-407(2)(i)(U) applied to sales of tangible personal property, the literary-agent services were not subject to sales and use tax.

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This page answers the general question as of 1991. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1991
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Ruling of the Connecticut Department of Revenue Services (DRS), typically issued to a specific taxpayer in response to that taxpayer's request and based on the specific facts presented and the Connecticut tax law in effect when it was issued. DRS may later declare a Ruling obsolete or supersede it by a subsequent Ruling, Policy Statement, or Announcement, so a taxpayer with different facts should not assume it still applies. Taxpayer-identifying details are redacted. Connecticut imposes its sales and use tax solely at the state level: there are no local or municipal sales taxes. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
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Plain-English summary

Literary agents represented authors in dealings with publishers and the publishing industry, aiming to place manuscripts and have the works published. Compensation could be a fixed retainer or a commission contingent on successful placement and publication.

DRS held that the services were not taxable sales-agent services under Conn. Gen. Stat. § 12-407(2)(i)(U). The manuscript embodied the author's ideas and intellectual product. Because it was not tangible personal property under § 12-407(13), an agent helping turn those ideas into a marketable book was not acting as an agent in the sale of tangible personal property.

What this means for you

The historical classification turned on the property being represented. The payment arrangement -- retainer or success commission -- did not change the result described in the ruling.

Common questions

Did a commission make the literary agent taxable? No. The ruling described both retainers and commissions but based its answer on the manuscript's intangible character.

Was the eventual printed book relevant? DRS focused on the author's manuscript and the collaborative effort to turn its ideas into a book; the manuscript itself was not tangible personal property.

Citations and references

  • Conn. Gen. Stat. § 12-407(2)(i)(U) -- historical sales-agent-services provision.
  • Conn. Gen. Stat. § 12-407(13) -- tangible personal property definition.
  • Ruling 93-3 -- identified by DRS as citing this ruling.

Source

Original ruling text

Ruling 91-4, Sales Agent Services

Ruling 91-4

Sales Agent Services

This Ruling is cited in   Ruling 93-3

FACTS:

Literary agents enter into a contractual relationship with their author/clients to represent them with publishers and the publishing industry for the purpose of assisting the author/client in the ultimate publishing of his literary work. Compensation to the literary agent is based upon different arrangements but generally can be broken down into (a) retainer arrangements which are not contingent upon future events and (b) commission arrangements which are contingent upon successful placement of the manuscript and ultimate publishing of the literary work. The services provided on behalf of the author/client are rendered both at the offices of the client, at the offices of the literary agent and at the offices of prospective publishers and printers, etc.

ISSUE:

Whether the services rendered by literary agents are subject to sales and use taxes under Section 12-407(2)(i)(U) of the General Statutes as "services of the agent of any person in relation to the sale of any such item of tangible personal property for such person."

RULING:

The manuscript represents the intellectual product of the author and is an expansion of the author's thoughts. In representing the author, the literary agent hopes to induce a publisher, in a collaborative effort, to turn the ideas and concepts contained in the manuscript into a marketable book. Because such manuscripts are not considered to be tangible personal property, as that term is defined in Section 12-407(13), the services rendered by literary agents are not subject to sales and use taxes under Section 12-407(2)(i)(U).

LEGAL DIVISION

February 5, 1991

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