Do fashion stylists owe Texas sales tax on rentals and services they provide for still-photography shoots versus for motion picture, video, or audio production?

Plain-English summary

The Texas Comptroller's Tax Policy Division wrote to a fashion stylist agency about sales tax on the preproduction, production, and postproduction services its fashion stylists perform during photographic shoots, for clients including photographers, advertising agencies, clothing manufacturers, magazines, and retailers such as catalog companies and department stores.

The letter draws a line between two situations. For still photography, the taxability of the services, rentals, etc. discussed had not changed from a prior response the Comptroller's office sent to the same office on June 15, 1990. But for motion picture, video, or audio production, the rules changed starting October 1, 1993: producing a motion picture, video recording, or audio recording for consideration — where a copy of it is sold or offered for ultimate sale, licensed, distributed, broadcast, or otherwise exhibited — is now treated as manufacturing for Texas sales tax purposes. Machinery and equipment that is rented or leased for that kind of production is exempt.

The letter explains that if the same rentals/services discussed in the 1990 response are instead provided to someone producing an original motion picture, video recording, or audio recording from which copies will be made and sold, that person may qualify for the manufacturing exemption. As an example, the letter notes that prop rentals for the production of a motion picture, under these circumstances, will qualify for the manufacturing exemption.

What this means for you

Fashion stylist agencies and similar service providers

If your stylists' preproduction, production, and postproduction work is tied to still photography, the tax treatment described in the Comptroller's 1990 response to your office still applies — this letter doesn't change that. But if the same kind of rentals or services are instead being provided to someone producing a motion picture, video recording, or audio recording (where copies will be sold, licensed, distributed, broadcast, or exhibited), the equipment/machinery rented or leased for that production may now qualify for a manufacturing exemption, effective for productions on or after October 1, 1993.

Photographers, advertising agencies, and production clients

If you hire a stylist or rent props/equipment for a motion picture, video, or audio production intended to be copied and sold, licensed, distributed, broadcast, or exhibited, ask whether the manufacturing exemption applies to those rentals — the letter gives prop rentals as a specific example that can qualify.

Accountants and tax professionals

The key distinction in this letter is between still photography (taxed under the pre-existing 1990 analysis) and qualifying motion picture/video/audio production (treated as manufacturing since October 1, 1993, with an exemption for rented/leased machinery and equipment used in that production).

Common questions

Q: Has the sales tax treatment of stylist services for still photography changed?
A: No. The letter states the taxability of the services, rentals, etc. for still photography has not changed from the Comptroller's response dated June 15, 1990.

Q: What changed for motion picture, video, or audio production?
A: Beginning October 1, 1993, producing a motion picture, video, or audio recording for consideration — where a copy is sold, licensed, distributed, broadcast, or otherwise exhibited — is considered manufacturing for sales tax purposes, and an exemption applies to machinery and equipment rented or leased for that production.

Q: Does prop rental for a movie qualify for the manufacturing exemption?
A: Based on this letter, yes — it gives prop rentals for the production of a motion picture, under the circumstances described, as an example that will qualify for the manufacturing exemption.

Q: Can another business rely on this letter?
A: The letter states its opinion is based upon the facts presented, and that the opinion may change if there are additional or different facts.

Citations and references

No specific statutes or administrative rules are cited by number in this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9511719L

Original ruling text

November 22, 1995

Dear ***:

Thanks for continuing to update your responsibilities for collecting and/or
paying sales tax on services performed by fashion stylists.

The fashion stylists pride certain preproduction, production, and
postproduction services during photographic shoots. Your clients include
photographers, advertising agencies, clothing manufacturers, magazines, and
retailers such as catalog companies and department stores.

The taxability of services, rentals, etc., has not changed from the response
sent to your office dated June 15, 1990 for still photography. However,
beginning October 1, 1993, the production for consideration of a motion picture
or a video or audio recording, a copy of which is sold or offered for ultimate
sale, licensed, distributed, broadcast, or otherwise exhibited, is considered
manufacturing for sales tax purposes. An exemption shall apply to machinery
and equipment that is rented or leased for such a production.

If the rentals/services discussed in the 1990 response are provided to someone
who is producing an original motion picture, video recording, or audio
recording from which copies will be made and the copies will be sold, then
this person may qualify to claim a manufacturing exemption. For example, prop
rentals for the production of a motion picture, as discussed above, will
qualify for the manufacturing exemption.

This opinion is based upon the facts presented. If there are additional or
different facts, this opinion may change. If you have other questions or need
more information, you may write to Tax Policy, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division