Ezel / Tax Rulings / TX
TX 9005L0999G09 Sales and/or Use Tax (State,Local,MTA) 1990-05-04

Were artwork, typesetting, photographs, and separate image-licensing fees taxable when used to print books, calendars, cards, and posters for sale?

Short answer: The artwork, typesetting, and photographs qualified as exempt materials necessary and essential to manufacturing printed goods for sale. Separate payments for the right to use an image or illustration were also nontaxable, whether calculated as a flat fee or by the number of printed items sold.

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This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Artwork, typesetting, and photographs bought for use in printing books, calendars, cards, and posters for sale were necessary and essential manufacturing materials. They qualified for the exemption in Tax Code section 151.318(a)(2).

The printer also bought rights to use artwork and photographs in the printed products. No tax was due on those image-use payments, whether the charge was a flat fee or based on sales volume, such as a stated amount per card sold.

Common questions

Were the physical artwork, typesetting, and photographs exempt? Yes, for the manufacturing use described.

Was a flat image-license fee taxable? No.

Was a per-item royalty taxable? No.

Citations and references

  • Tex. Tax Code § 151.318(a)(2).

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller May 4, 1990

Dear ***:

Thank you for letter concerning tax on the purchase of
certain items used in the printing of books, calendars,
cards and posters.

I understand your client buys artwork, typesetting, and
photographs for use in printing goods for sale. These items
are materials necessary and essential to the manufacturing
process and qualify for the exemption provided under 151.318
(a)(2).

Your client also purchases the right to use artwork, photo-
graphs etc. The image is used to print cards, posters, etc.
as agreed. The payment may be based on the number of items
sold, e.g. 25 cents per card sold, or it may be a flat fee.
No tax is due on the amount paid for the right to use a photo
or illustration.

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. The toll-free number is 1-88-531-5441. The regular
number is 512/463-4614. Or you may write me at the Taxabil-
ity Section of Legal Division. [(fax) 512-475-0900].

Sincerely,
Adina Whittemore
Taxability Section
Legal Services Division

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