When were an architect's programs, blueprints, specifications, renderings, bid sets, work copies, and as-built drawings taxable in Texas?

Plain-English summary

The Texas Comptroller generally treated programs, photostatic copies, blueline prints, work prints, final drawings, specifications, bid documents, contract copies, draw copies, change drawings, and as-built prints as nontaxable when provided as part of the original owner-architect professional-service agreement.

A color rendering was likewise nontaxable when included in that agreement. If someone instead brought an existing blueprint to the architect and ordered a color rendering, the total artwork charge was taxable.

Plans and specifications used to bid the project were nontaxable unless contractors paid a fee or nonrefundable deposit for them. A charge in that setting was a taxable sale of copies. Copies retained for the owner remained part of the nontaxable architectural service.

The architect had to pay sales tax on supplies and materials used to provide the nontaxable service. A handling markup was nontaxable if unrelated to a sale of taxable items. Stock blueprints and specifications not produced for a particular customer under an original agreement were taxable, as were publications, documents, plans, drawings, photographs, and other artwork separately produced to a customer's order.

What this means for you

The same type of drawing could be nontaxable as an integral architectural deliverable and taxable when sold separately as a copy or artwork. The original contract, recipient, fee or deposit, and purpose of the reproduction controlled the result.

Common questions

Were plans and copies delivered under the original owner-architect agreement taxable? Generally no.

Was a contract color rendering taxable? No.

Was a stand-alone color rendering ordered from existing blueprints taxable? Yes.

Were bid sets taxable? Not unless contractors paid a fee or nonrefundable deposit.

Did the architect pay tax on supplies and materials? Yes.

Were stock blueprints and separately ordered artwork taxable? Yes.

Citations and references

• The letter cited no numbered statute or Comptroller rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8702L0817F07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

BOB BULLOCK
Comptroller February 4, 1987

Dear *:

Thank you for your letter of January 7, 1987 and the copies of standard
owner-architect agreements, standard owner-contractor agreements and standard
construction contracts.

Your questions are restated and answered below.

A client hires me to design a building. The client agrees to pay me for
the materials I use on the project. I begin by writing a program listing all
of the spaces in the building. I print copies of this for the client's review.

Question 1: Are the photostatic copies taxable?

Answer: Not taxable as a part of the professional architectural service
provided to the client per the owner/architect agreement.

Upon approval of the program, I design a plan and elevations of the
building for the approval of the owner. I print copies of the drawings to give
to the owner.

Question 2: Are the blueline prints taxable?

Answer: Not taxable. See answer #1.

Upon the approval of the design, I prepare detailed drawings for use by
the engineers, landscape architect and interior designer. These are prints
used to prepare other drawings and to work out the details. These are "work
prints" for the owner for which he has agreed to reimburse me.

Question 3: Are the "work prints" a taxable item?

Answer: Not taxable. See answer #1.

The final working drawings (blueline prints) and copies of the
specifications (photostatic copies) are prepared for the owner's review and
approval. Also, a color rendering (perspective drawing) is prepared for the
owner depicting the design for his approval and to be displayed in his office.

Question 4: Are the blueline prints and the photostatic copies taxable?

Answer: The blueline prints and copies provided as a part of the
original owner/architect agreement are not taxable.

Question 5: Is the color rendering taxable?

Answer: The color rendering is not taxable if provided as a part of the
architect/owner contract. If another architect, a contractor or an individual
brought a set of blueprints to you and requested a color rendering from the
blueprints, you must collect sales tax on the total charge for the artwork.

Upon approval of the construction documents (plans and specifications) 35
sets of the blueline prints and specifications are prepared to bid the project.
The owner has selected 10 general contractors to bid the project using 3 sets
of plans and specifications. One set of plans and specifications is retained
for the owner, electrical engineer, mechanical engineer, structural engineer
and the architect. The owner is required to reimburse me for the printing.

Question 6: Are the plans and specifications to be used to bid the
project taxable?

Answer: Not taxable unless the contractors are charged a fee or
non-refundable deposit for use of the plans and specifications. If so, this is
a sale of copies and sales tax must be collected from the contractors based on
the selling price.

Question 7: Are the plans and specifications to be retained by the
professionals taxable?

Answer: Same as answer #6.

Question 8: Are the plans and specifications to be retained by the owner
taxable?

Answer: Same as answer #1.

Upon receipt of bids from the general contractors, numerous copies of the
bids are made for the owner's and architect's use in determining the lowest and
best bidders. Letters are written to the bidders informing them of the
decision. A contract is written for the owner/contractor agreement and
numerous copies are made.

Question 9: Are "work copies" of the bid taxable?

Answer: Not taxable if provided as a part of the original owner/architect
contract.

Question 10: Are the copies of the letters sent to the bidders taxable?

Answer: Same as answer #9.

Question 11: Are copies of the owner/contractor agreement taxable?

Answer: Same as answer #9.

The agreement between the owner and the general contractor is executed
and construction begins. I review monthly "draws" from the contractor for
money from the owner. Numerous copies are made for our use as work copies.
Also, 8" X 11" drawings are prepared to alter and revise the contract documents
resulting from error in the plans or specifications, recommended changes by the
general contractor or new instructions from the owner.

Question 12: Are copies of the "draws" taxable?

Answer: Not taxable. See Answer #1.

Question 13: Are copies of the "changes" taxable?

Answer: Not taxable. See answer #1.

At the end of the project, the owner requests a set of "as built"
drawings be prepared. These drawings are blueline prints with markings made to
the general contractor showing exactly how the building was built.

Question 14: Are these "as built" prints taxable?

Answer: Not taxable. See answer #1.

In all of these examples, I have assumed that the printing was done in
our office. I assume that if the prints were prepared elsewhere and tax was
paid on the prints by our office, no additional tax should be charged to the
owner. If our office adds a mark up for handling the prints, is that 10% mark
up taxable? We believe that it is merely part of our services which are exempt
from sales tax.

Answer: You should pay sales tax on all supplies and materials used to
provide your non-taxable architectural service. The markup is not taxable if
it is not related to the sale of taxable items.

You must collect sales tax on all sales of copies of "stock" blueprints
and specifications which are not produced for a specific customer under an
original owner/architect agreement. Also, sales of publications, documents,
plans, drawings, photographs, and other artwork produced to a customer's order
are taxable sales of tangible personal property.

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,
Julie Pesl
Tax Policy Section
Tax Administration Division