Could a printing business buy onsite photocopies tax-free when it intended to resell the printed material?

Subject

Resale Exemption for Onsite Photocopying Charges

Plain-English summary

The printing-business customer could buy the onsite photocopies tax-free for resale by giving the reprographics provider a properly executed resale certificate. The provider supplied equipment, an operator, and materials, but Florida treated the transaction as a sale of tangible printed material rather than only a service.

The exemption covered both parts of the provider's pricing: the monthly minimum charge and the charge per impression.

If the customer resold only some copies and used the rest, the exemption had to be apportioned. If the split was unknown at purchase, the customer could buy all copies tax-free and accrue use tax later when copies were consumed instead of resold.

What this means for you

Bundling production equipment and labor with the paper output did not prevent resale treatment. The critical facts were that printed tangible property was produced, the buyer actually resold it, and the seller held a valid certificate.

A certificate did not exempt copies taken for the buyer's own use. Mixed-use customers needed an allocation or later use-tax accrual.

Common questions

Q: Was onsite photocopying treated as a service? No. The Department treated the described arrangement as a sale of printed tangible personal property.

Q: Did the resale exemption cover the monthly minimum? Yes.

Q: Did it cover per-impression charges? Yes.

Q: What if the customer used some copies internally? Only the resold portion was exempt; the consumed portion was taxable.

Q: What if the customer did not know the split in advance? It could buy tax-free and accrue use tax when printed material was consumed rather than resold.

Citations and references

• Fla. Admin. Code r. 12A-1.038(1), (3) — resale certificates and the seller's collection duty
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97A-083

Original ruling text

SUMMARY

The provider of onsite reprographic (photocopying) services
which include equipment, operator and materials, is
considered to be selling tangible personal property in the
form of printed material. If a purchaser of the printed
material claims that it is reselling the printed material,
and provides a properly executed resale certificate, no tax
would be due on the transactions. This would include both
the "monthly minimum charge" and the "charge per
impression."

Dec 03, 1997

Re: Technical Assistance Advisement (97A-083)
Resale Exemption for Purchase of Photocopies
Rule 12A-1.038, F.A.C.
XXX ("Taxpayer")
XXX ("Customer")

Dear :

This is in response to your letter of July 29, 1997, requesting
the issuance of a Technical Assistance Advisement, pursuant to
Section 213.22, F.S., and Chapter 12-11, F.A.C., regarding the
applicability of a resale exemption claim being made by a
customer in the printing and printing services business. Your
letter provides the following pertinent facts:

The taxpayer's customer,... is claiming an exemption from
sales tax on a Document Management wherein [Taxpayer] is
providing onsite reprographic services which includes
equipment, operator and materials.

The taxpayer invoices the customer a "monthly minimum
charge," and a charge per impression over the monthly
minimum. [Customer] is claiming that these charges are
exempt under a resale exemption since the printed matter

being produced is resold.

Determination

The Department has previously determined that when Taxpayer
provides onsite reprographic (photocopying) services which
include equipment, operator and materials, that it is selling
tangible personal property in the form of printed material.

Rule 12A-1.038(1), F.A.C, discusses sales for resale, and
provides in part:

(1) It is the specific legislative intent that each and
every sale, admission, use, storage, consumption, or rental
is taxable under Chapter 212, F.S., unless such sale,
admission, use, storage, consumption, or rental is
specifically exempt. The exempt status of the transaction
must be established by the dealer. Unless the dealer shall
have taken from the purchaser a certificate signed by the
dealer or the dealer's authorized representative to the
effect that the property or service was purchased for
resale and bearing the date, the name and address of the
purchaser, the effective date of the certificate, and the
number of the dealer's certificate of registration, or a
certificate signed by an authorized representative of the
organization bearing the number of the organization's
consumer's exemption certificate, the effective date of the
certificate, and the expiration date of the certificate,
the sale shall be deemed to be a taxable sale at
retail,....

(2) ...

(3) A resale certificate is required from every purchaser
who purchases tangible personal property or service for
resale, subject to the provisions of subsection (1) of this
rule. Otherwise, the dealer will be required to collect
and remit the tax to the Department of Revenue....

Therefore, if a customer in the printing business claims that it
is reselling all of the printed material provided by Taxpayer,

and it provides a properly executed resale certificate, no tax
would be due on the transactions. This would include both the
"monthly minimum charge" and the "charge per impression." If the
customer claims that he is reselling a part of the printed
material and using a part of the material then the exemption
would have to be apportioned so that only the material being
resold would go untaxed. If it is unknown at the transaction
date what portion of the printed material will be used and not
resold, then all of it can be purchased tax free and use tax can
be accrued when the printed material is consumed and not resold.

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 on 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 than
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 which 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 the response.

Sincerely,

Jonathan E. Swift
Tax Law Specialist
Technical Assistance and Dispute Resolution

Control #30238

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