Ezel / Tax Rulings / TX
TX 8912L0995F02 Sales and/or Use Tax (State,Local,MTA) 1989-12-27

Were an advertising agency's consultation charges taxable when tied to producing a master layout or blueprint for the printer or client?

Short answer: Yes. Because the consultation related to producing finished art or employee-fabricated property, the consultation charges on all four sample invoices were taxable.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 advertising agency's production work created a master layout or blueprint sent to the printer or client.

Because the consultation charges were related to producing finished art or employee-fabricated property, the Comptroller found the consultation fees taxable on all four sample invoices.

Common questions

Were the consultation fees taxable? Yes.

What connected them to tax? They related to the production of finished art or employee-fabricated property.

Did the ruling decide unrelated stand-alone consulting? No.

Citations and references

  • 34 Tex. Admin. Code Rule 3.321(a)(4), (a)(5)(K), and (c)(4)(J)-(L)

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

December 27, 1989

Dear **:

Thank you for your letter dated December 13, 1989, concerning the
taxability of various charges billed by **** to its
customers.

I have enclosed a copy of Rule 3.321 Advertising Agencies. This
rule has not been updated but I have indicated the changes in
sections (a)(5)(k) and (c)(4)(J)-(L).

You indicated in your letter that "the charges for 'production'
are for the in-house development of the master layout or
'blueprint' that goes to the printer or client." Please refer to
the definition of finished art given in section (a)(4) of the
rule. Since the consultation charges are related to production of
finished art or employee-fabricated property, the consultation
charges in all four of the sample invoices that you submitted are
taxable.

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

Please feel free to contact me if you have any additional
questions. You may write me, call toll free 1-800-252-5555 (ext.
3-4685) from anywhere in the United States or phone 512/463-4600.

Sincerely,
Julie Pesl
Tax Correspondence

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