Were typesetting and typesetting-output services for artists, designers, advertising agencies, and printers subject to Utah sales tax?

Plain-English summary

Utah Private Letter Ruling 89-009 addressed a service bureau providing typesetting to artists, designers, advertising agencies, and printers.

The business also produced typesetting output from disks supplied by customers.

The Commission confirmed that the described service was exempt from sales tax under the third paragraph of Tax Bulletin 8-89.

Described service

The service bureau characterized its work as the first step in an unfinished product.

Customers took the type, incorporated it into their work, and passed the material to a printing company.

The ultimate printed item then went to the artist's, designer's, or agency's client.

Supplies

The business said it paid tax on the supplies it used.

The Commission's response did not disturb that treatment.

Its conclusion concerned the charge for the described typesetting service.

Holding

Under the stated business activity:

• Typesetting services were exempt from sales tax.
• Typesetting output from customer-supplied disks fell within the described service.
• The Commission relied on the third paragraph of Tax Bulletin 8-89.
• The service bureau paid tax on supplies it consumed.
• The response did not provide the full text of the bulletin's test.

What this means for you

Typesetting and prepress businesses

The ruling treated the described intermediate typesetting activity as an exempt service rather than a taxable finished-product sale.

Designers, agencies, and printers

The tax treatment of one step did not determine the treatment of later design, printing, or finished-product transactions.

Accountants and tax professionals

Review the current rule and the complete current guidance for the actual mix of service, digital output, and tangible property.

Common questions

Q: Were the typesetting charges taxable?

A: No.

Q: Did the ruling cover output from customer disks?

A: Yes, as part of the described service.

Q: Did the business pay tax on its own supplies?

A: Yes.

Q: Did the response reproduce Tax Bulletin 8-89's full standard?

A: No. It referred to the bulletin's third paragraph.

Key source language

• Result: “the typesetting service done by XXXXX is exempt from sales tax.”
• Authority: the response relied on “the third paragraph of Tax Bulletin 8-89.”
• Business description: the bureau performed “typesetting and output typesetting from disks supplied by our customers.”
• Production stage: “We are the first step in an unfinished product.”

Citations and references

• Utah Tax Bulletin 8-89

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 89-009
• Scope note: the response is brief and confirms only the described business activity under the cited bulletin paragraph.
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

89-009

Response December 13, 1989

December 13, 1989

XXXXX, CPA

Dear XXXXX:

In response to your letter of October 27, 1989, I believe the typesetting service done by XXXXX is exempt from sales tax as explained in the third paragraph of Tax Bulletin 8-89, referred to in your letter.

Respectfully,

XXXXX

Managing Auditor

M E M O R A N D U M

TO: XXXXX

Auditing

FROM: XXXXX

DATE: November 6, 1989

SUBJECT: Request for Declaratory Judgment/Advisory Opinion

XXXXX, C.P.A., has requested a declaratory judgment/advisory opinion on the taxability of services by XXXXX.

Please respond according to the guidelines established by the Commission. Thank you.

October 27 1989

The Commissioners

Utah State Tax Commission

160 East 300 South

Salt Lake City, Utah 84134-0400

REF: Application for Ruling on Taxability of Services by XXXXX, XXXXX, XXXXX

Ladies and Gentlemen:

Your recent publication setting forth the general principles for taxing the services of typographers leads us to believe that my client, XXXXX, is not required to collect sales tax for her services.

Based on my client's description of her services, quoted below, we ask you to rule on this question for this particular business.

"XXXXX is a service bureau for artists, designers, advertising agencies, and printers. We do typesetting and output typesetting from disks supplied by our customers. We are the first step in an unfinished product. The type is then pasted on armbands by our clients and given to a printing company to print. The finished product is then given to the artist or designer or agency's client for their use, either to sell or use."

"I pay taxes on supplies I use. My clients are then taxed by me when they pick up their type. They in turn tax their client for their work. The printer taxes the work. If the client sells the finished piece, it is taxed again."

The description given is accurate with respect to all her business activity. We feel practically certain that this activity fits within your guidelines for non-taxable services but would like your confirmation so that the issue can be settled now. My client states that she has competitors who do not collect sales tax, and that of course gives them an unfair-advantage.

We will be pleased if you will respond to either XXXXX or to us.

Very truly yours,

XXXXX