Tax Type
Retail Sales and Use Tax
Description
Patent design drawing service
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
03-23-1989
March 23, 1989
Re: Ruling Request/ Sales and Use Tax
Dear**************
This will reply to your letter of December 6, 1988 seeking information on the application of the sales and use tax to various services provided by**************(taxpayer).
FACTS
In connection with its patent design drawing service, the taxpayer provides clients (who are exclusively patent law firms and corporate patent law departments), with the drafting of original patent drawings for filing in the U.S. Patent and Trademark office; the redrafting of U.S. patent drawings to comply with various requirements for filing of patents in foreign countries; the reproduction or copying of patent documents; and a messenger service for the filing of various documents with the U.S. Patent and Trademark Office.
You ask whether the taxpayer must charge sales tax when billing clients for any of the above described services.
RULING
In accordance with the enclosed October 17, 1986 determination, the taxpayer need not charge sales tax when providing patent design drawings to clients, or when redrafting patents for filing in foreign countries for such clients. However, the taxpayer must add the tax to charges to its clients for duplicate copies of patent documents, since the true object of such transactions is the provision of tangible personal property (copies), and not the provision of an exempt patent design drafting service.
Charges for the taxpayer's messenger service for the filing of documents with the U.S. Patent and Trademark office are not subject to sales tax, provided that no items of tangible personal property are conveyed to clients in connection with this service.
I hope that the foregoing has responded to your questions but let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner