Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. This section discusses the taxability of the
printing industry. For information on the taxability of mailing bureau services
and a discussion of direct mail, refer to WAC
458-20-141.
For information on the taxability of printers and publishers of newspapers,
magazines, and periodicals, refer to WAC
458-20-143.
(2)
Definition. The phrase
"printing industry" includes letterpress, offset-lithography, and gravure
processes as well as multigraph, mimeograph, auto typing, addressographing and
similar activities.
(3)
Business and occupation tax.
(a)
Printers are subject to the business and occupation tax under the printing and
publishing classification upon the gross income of the business.
(b) Effective July 1, 2009, printers of
newspapers are taxable under the publication of newspapers classification of
the B&O tax upon the gross income of the business. Persons reporting income
under the publication of newspapers classification of the B&O tax must file
a complete annual tax performance report with the department. In addition, such
persons must electronically file with the department all reports, returns, and
any other forms. Refer to
RCW
82.32.600 and WAC
458-20-267
for the specific guidelines and requirements.
(c)
Doing business inside and outside
the state.
RCW
82.04.460 requires that advertising income
earned by printers derived from business activities performed within Washington
be apportioned to this state for tax purposes. Refer to chapter 23 (E2SSB
6143), Laws of 2010 1st sp. sess. Part I for information on apportioning
advertising income.
(4)
Retail sales tax.
(a) The
printing or imprinting of advertising circulars, books, briefs, envelopes,
folders, posters, racing forms, tickets, and other printed matter, whether upon
special order or upon materials furnished either directly or indirectly by the
customer is a retail sale and subject to the retail sales tax, providing the
customer either consumes, or distributes such articles free of charge, and does
not resell such articles in the regular course of business. The retail sales
tax is computed upon the total charge for printing, and the printer may not
deduct the cost of labor, author's alterations, or other service charges in
performing the printing, even though such charges may be stated or shown
separately on invoices.
(b) Sales
of printed matter to advertising agencies who purchase for their own use or for
the use of their clients, and not for resale in the regular course of business,
are sales for consumption and subject to the retail sales tax.
(c) Sales of tickets to theater owners,
amusement operators, transportation companies and others are sales for
consumption and subject to the retail sales tax. Such tickets are not resold by
the theater owners or amusement proprietors as tangible personal property but
are used merely as a receipt to the patrons for payment and as evidence of the
right to admission or transportation.
(d) Sales of school annuals and similar
publications by printers to school districts, private schools or student
organizations therein are subject to the retail sales tax.
(e) Sales by printers of books, envelopes,
folders, posters, racing forms, stationery, tickets and other printed matter to
dealers for resale in the regular course of business are wholesale sales. Such
sales are not subject to retail sales tax when seller obtains a resale
certificate for sales made before January 1, 2010, or a reseller permit for
sales made on or after January 1, 2010, from the buyer to document the
wholesale nature of the sale as provided in WAC
458-20-102A
(Resale certificates) and WAC
458-20-102
(Reseller permits). Even though resale certificates are no longer used after
December 31, 2009, they must be kept on file by the seller for five years from
the date of last use or December 31, 2014.
(f) Charges made by bookbinders or printers
for imprinting, binding or rebinding of materials for consumers are subject to
the retail sales tax.
(g) Sales to
printers of equipment, supplies and materials which do not become a component
part or ingredient of the finished printed matter sold or which are put to
"intervening use" before being resold are subject to the retail sales tax
unless specifically exempt (see subsection (5) of this section). This includes,
among others, sales of fuel, furniture, and lubricants.
(h) Sales to printers of paper stock and ink
which become a part of the printed matter sold are sales for resale and are not
subject to retail sales tax when the buyer provides a resale certificate (WAC
458-20-102A )
for sales made before January 1, 2010, or a reseller permit (WAC
458-20-102 ) for
sales made on or after January 1, 2010, to the seller.
(5)
Exemption for sales of computer
equipment to printers.
RCW
82.08.806 and
82.12.806
provide a retail sales and use tax exemption to a printer or publisher, of
computer equipment, including repair parts and replacement parts for such
equipment, when the computer equipment is used primarily in the printing or
publishing of any printed material, or to sales of or charges made for labor
and services rendered in respect to installing, repairing, cleaning, altering,
or improving the computer equipment. This exemption applies only to computer
equipment not otherwise exempt under
RCW
82.08.02565.
(6)
Commissions and discounts.
(a) There is a general trade practice in the
printing industry of making allowances to advertising agencies of a certain
percentage of the gross charge made for printed matter ordered by the agency
either in its own name or in the name of the advertiser. This allowance may be
a "commission" or may be a "discount."
(b) A "commission" paid by a seller
constitutes an expense of doing business and is not deductible from the measure
of tax under either business and occupation tax or retail sales tax. On the
other hand, a "discount" is a deduction from an established selling price
allowed to buyers, and a bona fide discount is deductible under both these
classifications.
(c) In order that
there may be a definite understanding, printers, advertising agencies and
advertisers are advised that tax liability in such cases is as follows:
(i) The allowance taken by an advertising
agency will be deductible as a discount in the computation of the printer's
liability only in the event that the printer bills the charge on a net basis;
i.e., less the discount.
(ii) Where
the printer bills the gross charge to the agency, and the advertiser pays the
sales tax measured by the gross charge, no deduction will be allowed,
irrespective of the fact that in payment of the account the printer actually
receives from the agency the net amount only; i.e., the gross billing, less the
commission retained by the agency. In all cases the commission received is
taxable to the agency.
Statutory Authority:
RCW
82.32.300 and
82.01.060(2).
11-04-010, § 458-20-144, filed 1/21/11, effective 2/21/11; 06-04-033,
§ 458-20-144, filed 1/26/06, effective 2/26/06; 05-03-052, §
458-20-144, filed 1/11/05, effective 7/1/05; Order ET 70-4, § 458-20-144
(Rule 144), filed 6/12/70, effective
7/12/70.