Sales And Use Tax Regulations - State Of California - Board Of Equalization printable pdf download

State of California

BOARD OF EQUALIZATION

SALES AND USE TAX REGULATIONS

Regulation 1502.1. WORD PROCESSING.

Reference:

Sections 6006, 6010, 6011, 6012, 6015, 6016, Revenue and Taxation Code.

(a) GENERAL. Tax does not apply to charges for furnishing original letters or documents, or carbon copies

produced simultaneously with the original, prepared by using a typewriter or word processing equipment. Where the

word processing company provides only an original letter or document, or carbon copies produced simultaneously

with the original, the true object of the contract is the performance of a service and not the furnishing of tangible

personal property. The word processing company is the consumer of tangible personal property used in providing

the service.

Tax applies to charges for producing multiple copies of letters, manuscripts, or other documents using word

processing equipment. Multiple copies include form letters produced with a slight variation which personalizes

essentially the same letter. Tax applies to the entire charge without deduction for charges for setting up the

machine, keyboarding, or assembling the material. Charges for providing additional copies are subject to tax

regardless of whether the original was prepared using a typewriter or word processing equipment and regardless of

whether the copies are produced by computers, word processors, copying machines, or other methods.

Tax does not apply to charges made by a word processing company for keyboarding original names and addresses,

setting up and sorting, and for printing the names and addresses onto mailing labels. (See Regulation 1504 for an

explanation of how tax applies to mailing services).

Tax does not apply to charges made when a word processor is used to produce copy which is acquired and used

exclusively for reproduction purposes since Revenue and Taxation Code section 6010.3 excludes typography from

the definition of sale or purchase.

(b) EXAMPLES OF THE APPLICATION OF TAX UNDER SPECIFIC CIRCUMSTANCES.

(1) Preparation of Standard Letters and Envelopes For Mailing. A word processing operator keyboards and

records an address list and standard letter on magnetic media. The letter is then automatically typed to each

person on the address list. The prerecorded address list is then used to address envelopes inserted into the

machine. The charges made for setting up the machine, keyboarding the material and typing out the letters are

taxable. The charges made for addressing the envelopes are nontaxable if separately stated (See Regulation

1504).

(2) Manuscripts. An author brings a manuscript to a word processing company. The operator keyboards the

material and records it on magnetic media. A draft copy of each page of the recorded material is printed out (typed

automatically) and given to the author to proof-read. The author makes corrections and changes on the draft and

returns it to the operator. The operator makes the necessary changes using a word processor. A final copy is then

printed out for the author to submit to a publisher. The charges made for the original keyboarding of the manuscript,

printing out the draft copy, editing, and printing out a final copy are nontaxable. Tax does not apply to charges for

carbon copies prepared at the same time as the original copy; however charges for photocopies are taxable.

(3) Assembling Final Product From a Paragraph Library. An attorney brings several paragraphs to a word

processing company which uses word processing equipment to keyboard and record the paragraphs on magnetic

media to form a “paragraph library.” The attorney then notifies the company to select certain stock paragraphs, for

example paragraphs 1, 8, 11, 29, 16, 12, 87, 100, 56, and 57 in that order, to create a will for his client. The

attorney provides variable information to be inserted into proper position in the paragraphs, such as: make of the

will, maker’s spouse, maker’s children and their date of birth, city and county of residence. The operator instructs

the machine (with keyboard commands) to assemble those specified paragraphs with the necessary variable client

information and to print out (automatically type) a will. All of the charges made for keyboarding original paragraphs,

printing out a draft of all paragraphs for the attorney’s use, assembling the paragraphs as requested, and printing

out individual wills (and any carbon copies of the original) are nontaxable. Charges for photocopies are taxable.

Sales And Use Tax Regulations - State Of California - Board Of Equalization

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