Which parts of a customized employee-safety program were taxable, and how should the provider tax printing and binder inputs?

Plain-English summary

Utah Private Letter Ruling 92-012 classified the individual components of a workplace-safety program marketed to physicians.

The Commission treated surveys, training, custom preparation, maps, explanations, and consultations as nontaxable services.

It treated several printed deliverables as taxable tangible personal property.

Nontaxable services

The Commission classified these charges as nontaxable:

• Surveying a client's products.
• Performing an employee training seminar.
• Preparing a Material Safety Data Sheet file.
• Preparing a custom facility map showing exits and safety equipment.
• Explaining safety guidelines customized for a particular customer.
• Telephone consultation.

The source described the Material Safety Data Sheet file as a tabulated collection of safety sheets for chemicals and biological products in the customer's workplace.

Taxable printed property

The Commission classified these items as taxable tangible personal property or printed matter:

• A hazardous-products index.
• A written bloodborne-pathogen program.
• Written formaldehyde-usage guidelines.

The requester described the bloodborne-pathogen program as an approximately 75-page workplace-safety program and the formaldehyde guidelines as a written safety program.

Printing and binder inputs

For a nontaxable service or product, the provider properly paid tax on printing costs and binders.

When the provider made a taxable sale of tangible personal property, it could purchase those materials tax-free for resale.

Safety equipment

The requester initially listed fire extinguishers, eyewash stations, and similar equipment.

It later told the Commission that it would not provide those items and would instead give customers vendor names and addresses.

The response therefore did not classify sales of the safety equipment itself.

Holding

Under the listed program:

• Product surveys were nontaxable.
• Training seminars were nontaxable.
• Material Safety Data Sheet file preparation was nontaxable.
• A hazardous-products index was taxable.
• A custom facility map was nontaxable.
• A bloodborne-pathogen program was taxable printed matter.
• Formaldehyde-usage guidelines were taxable printed matter.
• Customized guideline explanations were nontaxable.
• Telephone consultation was nontaxable.
• The provider paid tax on printing and binders for nontaxable work.
• Materials for taxable property sales could be bought tax-free for resale.

What this means for you

Safety and compliance consultants

Identify each deliverable rather than assuming one tax result for the entire program. The ruling treated customized services differently from printed products.

Training providers

Document the service work, customer-specific preparation, and any physical manuals or indexes separately.

Accountants and tax professionals

Review current bundled-transaction and digital-product law before carrying these 1992 print-based distinctions forward.

Common questions

Q: Were employee training seminars taxable?

A: No.

Q: Was preparation of a Material Safety Data Sheet file taxable?

A: No.

Q: Was a hazardous-products index taxable?

A: Yes.

Q: Were written bloodborne-pathogen and formaldehyde programs taxable?

A: Yes, as printed matter.

Q: Could the provider buy every binder and printing job tax-free?

A: No. It paid tax on inputs for nontaxable work and used resale treatment for materials in taxable property sales.

Key source language

• Survey: “a nontaxable personal service.”
• Training: “Performing an employee training seminar is not taxable.”
• Hazardous index: “a taxable sale of tangible personal property.”
• Printed programs: “the sale of printed matter and is taxable.”
• Inputs: “Where there is a taxable sale of tangible personal property, the materials should be purchased on a tax-free resale basis.”

Citations and references

• The response did not cite a statute or administrative rule.

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 92-012
• Scope note: the requester later clarified that it would not sell safety equipment, so the response classified only the listed services and written materials.
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

Response
August 28, 1992

August
28, 1992

XXXXX

Re:
Advisory Opinion - Employee Safety Program

Dear
Ms. XXXXX:

Your
request for an advisory opinion concerning which, if any, of the products and services you sell or provide to customers are subject to sales tax was referred to the Auditing Division for their analysis.

It
is the division staff recommendation that:

1. A survey of clients' products is a
   nontaxable personal service.

2. Performing an employee training seminar is
   not taxable.

3. Preparation of a Material Safety Data Sheet
   File is not a taxable service.

4. The sale of a hazardous products index is a
   taxable sale of tangible personal property.

5. The preparation and sale of a facility map
   with exits and safety equipment marked is a nontaxable custom service.

6. The bloodborne pathogen program is the sale
   of printed matter and is taxable.

7. The sale of formaldehyde usage guidelines is
   also a taxable sale of printed matter.

8. Charges for an explanation of XXXXX
   guidelines customized for a particular customer are not taxable.

9. Telephone consultation is not a taxable
   service.

10. It is proper to pay tax on the printing cost
    and on the cost of binders where the service or product sale is not taxable. Where there is a taxable sale of tangible personal property, the materials should be purchased on a tax-free resale basis.

If
you do not agree with this determination, you may appeal to the Tax Commission for a formal hearing. The results of that hearing would constitute a declaratory judgment and be appealable to the Utah State Supreme Court. A Notice of Appeal Rights and a copy of the Utah Taxpayer Bill of Rights are attached.

To
arrange for Americans with Disabilities Act accommodations, please contact the Tax Commission at (801) 530-6920, (801) 530-6077 or TDD (801) 530-6269 allowing three working days notice.

For
The Commission,

Joe
B. Pacheco

Commissioner

XXXXX

Heber
M. Wells Building

160
East 3rd South

Salt
Lake City, UT 84134

Dear
XXXXX,

Following
is the additional information which you requested in your June 18, 1992 letter.

1. A Material Safety Data Sheet File is a
   tabulated file or material safety data sheets (MSDS) for all chemical and biological products that a buyer has in his workplace. A MSDS is a written 1 or 2 page document stating the safety and health precautions for a certain chemical or biological products.

2. A Bloodborne Pathogen program is a written
   program (approx. 75 pages) informing the reader of the safety guidelines that he must maintain in his workplace in regards to an infectious disease, virus, or bacteria carried and spread through the blood.

3. Formaldehyde Usage Guidelines are a written
   program informing the reader of the safety guidelines that he must maintain in his workplace in regards to formaldehyde usage. Formaldehyde is a toxic preserving agent.

4. We have decided as a company not to provide
   eye stations, fire extinguishers etc. but rather provide our customers with the names and address of where they can purchase the equipment themselves. Therefore, the only tangible product our customers receive from us is customized written material printed and bound in a notebook. We are paying tax on the cost of printing the manual and on the purchase of the notebooks. The printing charges and the cost of the notebook is approximately 5% of the total charge to our customer.

I
hope this is information is what you need in order to issue an advisory opinion. If you need any further assistance, please call me at XXXXX.

Sincerely,

XXXXX

Heber
M. Wells Building

160
East 3rd South

Salt
Lake City, VT 84134

Attn:
Office of Commissioner

Dear
Sirs,

This
letter is a request for an advisory opinion as to the taxable status of the following transaction.

We
are getting ready to sell a Employee Safety Program to physicians in Utah. This is a customized program which involves an initial sign-up fee and also includes and yearly maintenance fee.

The
Employee Safety Program consists of the following items:

1. A survey of clients products

2. An employee training seminar

3. Material safety data sheet file

4. Hazardous products index

5. Map a facility with exits and safety
   equipment marked

6. Blood borne pathogen program

7. Formaldehyde usage guidelines

8. Explanation of O.S.H.A. guidelines,
   customized required client information, and necessary forms

9. Required equipment (example: fire
   extinguisher, eyewash station)

10. On-site training seminar

11. Telephone consultation

Please
advise us as to whether or not we should collect sales tax on the sales of our Employee Safety Program.

If
you have any further questions, please call XXXXX at (801)XXXXX.

Sincerely,

XXXXX