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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