Ezel / Tax Rulings / TX
TX 8810L0924G11 Sales and/or Use Tax (State,Local,MTA) 1988-10-18

Were fees for combining advertisers' videos and playing copies in malls and airport lounges taxable?

Short answer: No. Texas treated the display service as nontaxable, but the provider had to pay tax on monitors, dubbing equipment, blank tapes, and other inputs.

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This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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 provider combined advertisements from multiple companies into a master tape, made copies, and played them on monitors in shopping malls and airport lounges. Client fees depended on how often and where the spots ran.

The Comptroller treated that advertising-display service as nontaxable. The provider paid tax on monitors, dubbing equipment, blank tapes, and other taxable equipment and materials used to perform the service.

Common questions

Were client display fees taxable? No.

Who paid tax on monitors and blank tapes? The service provider.

Did the number of plays or locations change the answer? Not under the described facts.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller October 18, 1988

Dear *****:

Thank you for your recent inquiry regarding the taxability of your
business
activities.

You stated that you receive advertising videos from various companies
such as
*, *, *, *, and others. You take
these videos and
make a master tape which will contain from one to many advertisers
videos.
From this master you will make copies which you take to locations such as
shopping malls and airport terminal lounges. These tapes are played on
monitors at these locations for a length of time. You charge your
clients a
fee for this based on the number of times the spots are run and the
number
of locations where they are run.

You are providing a nontaxable service to your clients. You are required
to
pay tax on the purchase of the equipment and materials used in providing
this service. Equipment and materials means the monitors, dubbing
equipment, blank tapes and other taxable items.

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 our
toll-free
number 1-800-252-5555, ext. 34666. The regular number is 512/463-4600.
You
may write me at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Jo Ann Dieck
Tax Correspondence

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