Were typesetting charges for business forms exempt professional services when customers received a camera-ready board or computer file for approval?

Plain-English summary

The entire typesetting charge was subject to Florida sales tax. The customer received either a camera-ready "board" or a computer file containing the proposed form, and the Department found that deliverable was not an inconsequential element of the transaction.

The typesetting created a mock form for customer approval before production of the final business forms. The provider charged for typesetting even if the customer never placed a printing order, while any later business-form charges were billed separately.

Because the board or file mattered to the transaction, the professional-services exemption for transactions containing only inconsequential sales elements did not apply.

What this means for you

A service label does not control when a meaningful tangible or recorded deliverable is part of what the customer buys. Florida looked at the practical role of the approval board or diskette, not just the design work involved.

The fact that the board or computer file stayed at the provider's or printer's location for future orders, and that diskettes were ultimately returned, did not make the deliverable inconsequential on these facts.

Common questions

Q: Was typesetting treated as an exempt professional service? No. The associated board or computer file was a consequential sales element.

Q: Did tax apply only to the physical board or diskette? No. The Department required tax on the full typesetting sales price.

Q: Did it matter that the final printed forms were billed separately? No. The typesetting transaction itself included a meaningful approval deliverable and remained taxable.

Q: What if the customer never ordered forms? The facts said the customer still paid the typesetting charge, supporting treatment as its own taxable transaction.

Citations and references

• Fla. Stat. § 212.08(7)(v)1. — professional-service transactions with inconsequential sales elements
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97A-058

Original ruling text

SUMMARY

Taxpayer provides typesetting services for business forms
that it provides to its customers. The typesetting
services involve making mock forms for customer approval.
As a part of the typesetting service, the customer receives
a "board" which is the same as a mechanical. The "board"
is used as a camera ready copy that is approved by the
Taxpayer's customer and then used to produce business
forms. The "board" is not an inconsequential element of
the sales transaction. Consequently, the Taxpayer should
collect and remit sales tax on the full sales price charged
for the above described typesetting transaction.

Sep 04, 1997

Re: Technical Assistance Advisement 97A-058
Sales and Use Tax - Typesetting Charges For Forms
Section: 212.08, F.S.
Petitioner: XXX (herein "Taxpayer")
FEI: XX

Dear :

This letter is a response to your petition postmarked April
21, 1997, for the Department's issuance of a Technical
Assistance Advisement ("TAA") concerning the above referenced
party and matter. Your petition has been carefully examined and
the Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to
your request constitutes a TAA and is issued to you under the
authority of s. 213.22, F.S.

Discussion of Information

The following information was provided either in your
letter, telephone conversations, or in the attachments which
accompanied your letter:

Taxpayer provides typesetting services for business forms
that it provides to its customers in Florida. The Taxpayer
is currently charging its customers tax on the charges it
makes for the typesetting services.

The typesetting services involve making mock forms for
customer approval. In other words, typesetting is
designing a form to first be approved by the customer
before beginning work on the customer's order.

Some of the Taxpayer's typesetting is done by a third-party
vendor who either produces a "board" or produces a computer
file for a customer's approval. You enclosed a sample of
the "board" to assist in this determination. You asserted
that the "board" is the same as a mechanical and is used as
a camera ready copy that is approved by the Taxpayer's
customer and then used to produce business forms.

The rest of the Taxpayer's typesetting is done in-house on
computers which produce computer files. In a telephone
conversation, you described the computer files as diskettes
containing forms, etc., for the customer's approval. You
further stated that these diskettes are ultimately returned
to the Taxpayer.

The board or computer file is included in the selling price
of the typesetting, but the charges for the business forms
themselves are billed separately. Even if the customer
does not make an order, the customer is charged for the
typesetting services. The board or computer file is kept
either at the Taxpayer's or at the printing vendor's
location to be used in future orders.

Requested Advisement

Are the typesetting charges described above subject to tax?

Discussion, Analysis, and Conclusion of Law

Section 212.08(7)(v), F.S. (1996 Supplement), provides in

part:

(v) Professional services.

1. Also exempted are professional, insurance, or personal
   service transactions that involve sales as inconsequential
   elements for which no separate charges are made.

Based on the above statutory provision, any charge for
professional service transactions that involve sales as
inconsequential elements for which no separate charges are made
are exempt. From the facts presented, the "board" and computer
files are not inconsequential elements of the sales
transactions. Therefore, the Taxpayer should continue to collect
and remit sales tax on the full sales price charged for the
above described typesetting transactions.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the department only
under the facts and circumstances described in the request for
this advice, as specified in s. 213.22, F.S. Our response is
predicated upon those facts and the specific situation
summarized above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment from that
which is expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details that might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or this response.

Sincerely,

Leigh L. Ceci

Tax Law Specialist
/lc
Control #29018