Is a litigation-support videographer's entire fee for producing and delivering accident-reconstruction video/audio media to attorneys subject to sales tax?

Plain-English summary

A CPA asked on behalf of a planned business venture: a future enterprise that would provide audio/video production, editing, duplication, and computer graphics services -- for accident reconstruction, discovery, and similar litigation needs -- to litigating parties and their attorneys. The fee would be based on the cost of a technician's personal services, the use of production equipment, and the media itself. He asked whether the sale of the finished audio/video media would be subject to New York sales tax.

The Department answered by pointing to a controlling New York Tax Appeals Tribunal decision, Matter of Video Memories Associates, Ltd., which held that a videotape photographer had to collect sales tax on his receipts because he was transferring a videotape to customers for a fee -- and that transfer, not the underlying videotaping service, is what makes the transaction a taxable retail sale of tangible personal property. The Tribunal's reasoning (quoting the Administrative Law Judge it affirmed) is that even though part of what a videographer sells is expertise and the service of taping an event, "it is the videotape memorializing the special event that the customer is seeking" -- so when the videographer transfers the finished tape to the customer for a fee, the ENTIRE receipt (not just the media's cost) is a taxable sale.

Applying that precedent here, the Department concluded that the entire fee the future litigation-video enterprise would charge -- covering the technician's time, equipment use, and the media -- would be subject to New York State and local sales and use tax when the finished audio/video media is transferred to the customer.

What this means for you

Litigation-support videographers and video production companies

If your business delivers a finished recording (videotape, disc, or similar media) to a customer for a fee, expect the ENTIRE charge to be taxable -- including your technician's time and equipment costs -- not just a pro-rated media/materials charge. The controlling test is whether you're transferring a finished recording to the customer, not whether the underlying work involved significant professional skill.

Attorneys and litigants purchasing litigation video services

Budget for New York sales tax on the full invoice amount when you purchase accident-reconstruction, discovery, or similar video/audio production services that result in a delivered recording -- this isn't treated as an exempt professional service.

Accountants and tax professionals

This opinion is a direct, fact-specific application of the Video Memories Associates Tax Tribunal precedent to the litigation-support video niche -- useful whenever a client's business model involves producing and delivering a finished recording for a fee, regardless of how much skilled labor goes into it.

Common questions

Q: Does it matter how much of the fee reflects the technician's expertise versus the physical media?
A: No -- per the Video Memories Associates reasoning this opinion relies on, the entire fee is taxable once a finished recording is transferred to the customer, even though expertise and taping services are part of what's being paid for.

Q: Would videotaping alone, without transferring a copy to the customer, be taxed the same way?
A: The cited precedent notes that videotaping an event "by itself" (without transferring the tape) would not be taxable -- it's the transfer of the finished media for a fee that creates the taxable sale.

Q: Can another litigation-video business rely on this ruling?
A: No. This advisory opinion binds the Department only with respect to the specific petitioner and the future business described.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law § 1101(b)(3) (definition of receipt)
• Tax Law § 1101(b)(4) (definition of retail sale)
• Tax Law § 1101(b)(5) (definition of sale, selling or purchase)
• 20 NYCRR § 526.8 (definition of tangible personal property, including recordings)

Prior rulings and cases referenced:

• Matter of Video Memories Associates, Ltd., and Michael Marano, as Officer, Dec Tax App Trib, March 14, 1996, TSB-D-96(16)S
• Dynamic Telephone Answering v. State Tax Commission, 135 AD2d 978, 522 NYS2d 386, lv denied 71 NY2d 801, 527 NYS2d 767

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1996.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a96_72s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-96 (72) S
Sales Tax
December 6, 1996

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK

COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S960826B

On August 26, 1996, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Nicholas J. Silvestri, CPA, 62 North Main Street, Florida, New York 10921.
The issue raised by Petitioner, Nicholas J. Silvestri, CPA, is whether the sale of audio/video
media to attorneys or the parties in legal proceedings will be subject to New York State and local
sales and compensating use taxes.
Petitioner submits the following facts as the basis for this Advisory Opinion. A future
enterprise will be established to provide audio/video production, editing, duplication and computer
graphics relative to accident reconstruction, discovery, etc. to any litigating party and its attorneys.
The fee charged will be based on costs for personal services of a technician, the use of production
equipment and media.
Section l105(a) of the Tax Law imposes sales tax upon the receipts from every retail sale of
tangible personal property. Receipts are defined in Section l101(b)(3), in part, to mean "[t]he amount
of the sale price of any property and the charge for any service taxable under this article .... "
Section l101(b)(4) of the Tax Law defines the term "retail sale", in part, to mean "(i) A sale
of tangible personal property to any person for any purpose, other than (A) for resale as such or as
a physical component part of tangible personal property .
Section l101(b)(5) of the Tax Law states as follows:
(5) Sale, selling or purchase. Any transfer of title or possession or both,
exchange or barter, rental, lease or license to use or consume (including, with respect
to computer software, merely the right to reproduce), conditional or otherwise, in any
manner or by any agreement therefor, including the rendering of any services, taxable
under this article, for a consideration or any agreement therefor.
Section 526.8 of the Sales and Use Tax Regulations provides, in part:
(a) Definition. The term "tangible personal property" means corporeal
personal property of any nature having a material existence and perceptibility to the
human senses. Tangible personal property includes, without limitation:
*

*

*

-2­
TSB-A-96 (72) S
Sales Tax
December 6, 1996
(3) artistic items, such as sketches, paintings, photographs, moving picture
films and recordings;
In Video Memories Associates. Ltd.. and Michael Marano. as Officer, Det Tax App Trib,
March 14, 1996, TSB-D-96(16)S, the Tax Tribunal held that a videotape photographer was required
to collect sales tax on his receipts because he was transferring a videotape to his customers for a fee,
and this constituted a taxable sale of tangible personal property. In sustaining the Administrative Law
Judge's determination, the Tax Tribunal quoted the conclusion to the Administrative Law Judge's
determination as follows:
It is undoubtedly true that part of what petitioners sell is their expertise and the
service of taping events. However, it is the videotape memorializing the special event
that the customer is seeking. Petitioners' expertise is just one of the elements that
goes into making the video. While the videotaping of an event by itself would not be
taxable, when petitioners go to an event, videotape the event, and transfer the
videotape to the customer for a fee, petitioners are making a retail sale of tangible
personal property pursuant to Tax Law § l105(a), and the entire receipt is subject to
sales tax (Dynamic Telephone Answering v. State Tax Commission, 135 AD2d 978,
522 NYS2d 386, lv denied 71 NY2d 801, 527 NYS2d 767).
Accordingly, based on the foregoing, the entire fee charged by a future enterprise for the
transfer of audio/video media to its customer will be subject to State and local sales and use taxes.

DATED: December 6, 1996

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.