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BTLG Table of Contents > Sales and Use Tax Annotations > A > 100.0000 Advertising Agencies, Commercial Artists And Designers > Annotation 100.0168

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100.0000 Advertising Agencies, Commercial Artists and Designers—Regulation 1540

Annotation 100.0168

(c) Preliminary and Finished Art

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100.0168 Purchased Material Incorporated in Finished Art. As provided by Regulation 1540(a)(2)(B), advertising agencies are not agents of their clients with respect to the acquisition of materials which become physically incorporated into items of tangible personal property prepared by their own employees. Therefore, advertising agencies are retailers of purchased photographs, artwork, and typography which become physically incorporated into finished art produced by the agency's employees.

On the other hand, they may be agents acquiring property not incorporated into the finished art if the agencies purchase the photographs, artwork, etc., as agents and use them as manufacturing aids. Charges by the advertising agency for these manufacturing aids and the related agency fees are not part of the "gross receipts" from the sale of the finished art. 5/16/77.