Laws, Regulations and Annotations


Business Taxes Law Guide—Revision 2024

Sales and Use Tax Annotations

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120.0000 Automatic Data Processing Services and Equipment—Regulation 1502

Annotation 120.0107.800

(a) In General

120.0107.800 Electronically Delivered Graphics. A publishing company located in California provides a monthly sample of new clip art to its customers on the Internet for a $50 a month fee. Customers may also (1) subscribe to a monthly clip art diskette which is mailed directly to the customer's place of business or (2) subscribe to an electronic clip art newsletter which is available on the Internet and sent to the customer via e-mail.

Sales tax applies to the sale of graphics in the form of tangible personal property. Therefore, the sale of the artwork on the diskette is subject to sales tax since it is tangible personal property. Sales or use tax does not apply to the transfer of graphics by electronic transmissions. For example, the art work is sent to the customer by modem or posted on an electronic bulletin board and the recipient does not receive any tangible personal property, the transaction is not a sale subject to tax. A charge solely for on-line access is not taxable because such on-line access does not involve the transfer of tangible personal property. 3/29/96.