Ezel / Tax Rulings / TX
TX 8702L0796C06 Sales and/or Use Tax (State,Local,MTA) 1987-02-09

Did an advertising agency's sample documents establish an agency relationship with clients for Texas sales-tax purposes?

Short answer: Yes. The submitted documents proved an agency relationship, but the agency could not act as the client's agent for finished art or other taxable items produced by its own employees.

Apply this to your situation

This page answers the general question as of 1987. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1987
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 1987 Texas Comptroller letter approves sample documents that are not reproduced in the ruling and limits agency treatment when the advertising agency's own employees produce finished art or other taxable items. Advertising, agency, creative-service, digital-product, documentation, and local-tax rules may have changed. STAR documents may no longer represent current policy even when not marked superseded.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 advertising agency's submitted sample documents were sufficient to establish an agency relationship with its clients for sales-tax purposes.

The agency relationship had a limit. An advertising agency could not act as its client's agent for finished art or other taxable items produced by the agency's own employees.

What this means for you

Documenting an agency relationship mattered, but documentation did not convert the agency's own production of taxable property into an agent purchase for the client. Who created the finished art or other item controlled that boundary.

Common questions

Did the submitted documents establish an agency relationship? Yes.

Could the agency act as agent for finished art made by its employees? No.

Did the letter reproduce the approved documents? No.

Citations and references

  • Comptroller Rule 3.321 — advertising agencies.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 9, 1987

Dear ****:

Thank you for your recent letter concerning the establishment of agency
relationships between your advertising agency and its clients.

The sample documents you submitted are sufficient to prove such a
relationship exists for sales tax purposes. Rule 3.321, Advertising
Agencies,
is enclosed for your reference. Please note that an advertising agency
can
not act as agent for its client when finished art or other taxable items
are
produced by employees of the advertising agency.

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

Please feel free to contact me if you have additional questions. You
may
write me, call toll free 1-800-252-5555 from anywhere in Texas or phone
512/463-4600.

Sincerely,
Julie Pesl
Tax Policy Section
Tax Administration Division

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