Tax Type
Retail Sales and Use Tax
Description
Word processing
Topic
Taxability of Persons and Transactions
Date Issued
08-04-1986
August 4, 1986
Re: Request for Ruling/Sales and Use Tax
Dear ****************
This will reply to your letter of November 22, 1985, in which you submit a request for a ruling on the applicability of the sales and use tax to charges for word processing.
You state in your letter that your firm is engaged in word processing, which may entail tasks such as writing copy, creating lists, editing written documents, and preparing charts. The end product of these tasks is typed copy which is sold to your firm's customers.
The department has traditionally considered firms engaged exclusively in typing or word processing to be engaged in providing personal services, rather than in the sale of tangible personal property. Therefore, when such a firm prepares an original letter or document and provides carbon copies prepared simultaneously with the original, the charge made to the customer is not subject to the sales tax.
Only if a typing or word processing business moves beyond the rendition of a service and actually sells tangible personal property would it be required to register and collect the tax from its customers. For example, your firm need not collect the tax when an original letter or document is produced and sold; however, if the customer later requests additional copies of the same letter or document, tax will need to be collected on the charge for the extra copies. Similarly, when your firm prepares letter or document and has it printed on behalf of a customer, your charges to the customer for preparing the letter or document will not be taxable, but the charges made to the customer for printing will be taxable.
In addition, charges for the production of multiple copies of a letter or document are subject to the tax. Such a transaction might entail the production of form letters using a slight variation to individualize essentially the same letter. When producing multiple copies of a letter or document, a firm such as yours is providing much the same service as a printer and must collect the tax based upon the total charge for the products, including charges for setting up the machine, keyboarding, assembling the material, and any other charges for services in connection with the sale.
Because typing and word processing business are engaged primarily in rendering personal services, all typewriters, word processors, paper, supplies, and other tangible personal property used in rendering such services are subject to the sales and use tax. The sales tax should be paid to your suppliers on purchases of such items. If a supplier does not collect the sales tax, then your firm should file a use tax return with the department.
If your firm sells any tangible personal property upon which collection of the sales tax is required, you may purchase those items that will be resold under resale certificates of exemption. For example, if your firm has printing prepared for a customer, such printing may be purchased from the printer exclusive of the sales or use tax since your firm will be collecting the sales tax from your customer. It should be noted, however, that the resale exemption applies only to items that will be transferred to the customer. Thus, if your firm purchases typesetting for use in printing a document for a customer, the resale exemption would not apply because the typesetting does not become a part of the finished printing passed on to the customer.
If you have any further questions on the application of the tax to your firm, please feel free to contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner