Ezel / Tax Rulings / TX
TX 8611L0937C01 Sales and/or Use Tax (State,Local,MTA) 1986-11-17

How did Texas tax printed grocery sacks used for advertising, the advertising-space charge, and art setup or plate fees?

Short answer: The seller paid tax when buying the printed sacks and did not tax advertising space. The $45 art setup and plate fee was taxable, with resale-certificate treatment for outsourced workup.

Apply this to your situation

This page answers the general question as of 1986. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1986
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 1986 Texas Comptroller letter applies to advertising sold on printed grocery-type sacks, including a specified art setup and plates fee and possible third-party workup. Advertising, printing, packaging, artwork, setup, plate, resale-certificate, bundled-charge, and local-tax rules may have changed or differ for other media. STAR documents may no longer represent current policy even when not marked superseded. Identities are redacted. This summary is informational only and is not legal or tax advice.
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) is the authoritative source for any reliance.

Plain-English summary

The Texas Comptroller said the business was correct to pay tax when it purchased the printed grocery sacks. It did not have to charge customers tax on the advertising-space charge.

The $45 art setup and plates fee was taxable. If the seller hired a third party to prepare that workup, it could give the third party a resale certificate instead of paying tax.

What this means for you

The physical sacks, advertising space, and creative-production charge received different treatment. A nontaxable advertising charge did not make the setup and plate work nontaxable.

Common questions

Who paid tax on the printed sacks? The advertising seller when purchasing them.

Was the advertising-space charge taxable? No.

Was the art setup and plates fee taxable? Yes.

Could outsourced workup be bought for resale? Yes.

Citations and references

  • The letter cited no numbered statute or Comptroller rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

November 17, 1986

Dear ***:

I enjoyed our visit last Friday and appreciate your bringing a sample
sack and
copies of your contracts.

You are correct in paying tax on the printed sacks when you purchase
them.
There is no need to charge your customers tax on the advertising space.
You
should, however, charge your customers tax on the $45.00 art set-up and
plates fee. If you contract with a third party for the workup, then you
may
give the third party a resale certificate in lieu of tax on the workup.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Adina Whittemore
Tax Policy Section
Tax Administration Division

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