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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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100.0000 Advertising Agencies, Commercial Artists and Designers—Regulation 1540
Annotation 100-0015
(a) In General
100.0015 Advertising Agency Acting as Agent. An advertising agency entered into a written agreement with its clients indicating the advertising agency was the agent of the client. The agreement also provided for the agency to transfer title to all property to the client after each job was done. The agency issued resale certificates to its vendors and then marked up its cost when billing its clients on such jobs.
Under these facts, the advertising agency may have generally acted as an agent for its client by acquiring property from suppliers with a disclosed client and agency status, but it acted in a contradictory way by issuing its own resale certificate to vendors and marking up its cost when billing its clients. Also, title to these materials passed to customers when agency physically delivered them to the customer for review and approval.
Therefore, the full amount charged to the client for sales of tangible personal property is subject to sales tax, including charges for "preliminary art." Since title passed to the preliminary art, it does not meet the definition of preliminary art contained in Regulation 1540(a)(11). 12/31/93. (Am. 2005–2).