NE 01-06-1 Sales and Use Tax 2006-04-25

Are printing plates and plate-making equipment taxable to a Nebraska printer?

Short answer: Yes, for the non-reusable ones. Revenue Ruling 01-06-1 concludes that charges for printing plates and printing plate materials consumed in the printing process are taxable, and purchases of machinery and equipment used to make the plates are also taxable. A printer that makes printing plates not suitable for reuse (and buys the materials that become part of such plates) is treated as consuming them as a supply item -- they are not resold to customers, so the printer cannot buy them tax-free for resale and must pay sales or use tax under Regulation 1-057.05. The plate-making machinery and equipment used primarily to make non-reusable plates is likewise taxable, because the printer is not a 'manufacturer' when it makes plates it consumes itself, so it does not qualify for the manufacturing machinery and equipment exemption. By contrast, under Regulation 1-057.06 a printer may buy reusable printing plates (and materials that become part of reusable plates) tax-free for resale when they are sold to the customer before use; unless a written agreement says otherwise, printing aids are considered sold before use when the reusable aid is separately listed and priced on the customer's invoice. In all cases the printer must collect sales tax on the entire amount billed to the customer for the printed material, including any charge for plates or plate materials.

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This page answers the general question as of 2006. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

"Printing aids" are the plates and plate materials a commercial printer uses to put ink on paper. This ruling explains when a printer owes Nebraska tax on those plates and on the equipment used to make them, and when it can buy them tax-free for resale.

Non-reusable plates = taxable to the printer. Printing plates that are not suitable for reuse, and the materials that become part of such plates, are treated as consumed by the printer as a supply item. They are not resold to customers, so the printer cannot buy them tax-free for resale and must pay sales or use tax on them under Regulation 1-057.05. ("Printing plate materials" here means only items that become a component part of the plate itself.)

Plate-making equipment = also taxable. Machinery and equipment used primarily to make non-reusable plates is taxable to the printer. The printer is not a "manufacturer" in this situation, because it is making plates it will consume itself, so the plate-making equipment does not qualify for the manufacturing machinery and equipment exemption.

Reusable plates sold before use = tax-free for resale. Under Regulation 1-057.06, a printer may buy reusable printing plates (and materials that become part of reusable plates) tax-free for resale when the plates are sold to the customer before use. Unless a written agreement says otherwise, printing aids are considered sold before use when the reusable aid is separately listed and priced on the customer's invoice.

Tax on the finished job. In every case, the printer must collect sales tax on the entire amount billed to the customer for the printed material -- including any charge for plates or plate materials.

What this means for you

Printers making single-use plates

Pay tax on the plates and plate materials you consume, and on the equipment you use primarily to make them -- you are the consumer, not a reseller, and you are not a manufacturer for the exemption. Then charge your customer tax on the full price of the printed job.

Printers selling reusable plates to the customer

You can buy reusable plates tax-free for resale if you sell them to the customer before use. Make that resale clear by separately listing and pricing the reusable printing aid on the invoice (or by a written agreement), and still charge tax on the entire billed amount for the printed material.

Common questions

Q: Can I buy printing plates tax-free because I'll "resell" them in the job?
A: Only reusable plates sold to the customer before use. Non-reusable plates are consumed by you as a supply item, so they cannot be bought tax-free for resale and you owe tax on them.

Q: Does my plate-making machinery qualify for the manufacturing exemption?
A: No, when it is used primarily to make non-reusable plates you consume yourself -- you are not a manufacturer in that role, so the machinery is taxable.

Q: How do I show a reusable plate was sold before use?
A: Separately list and price the reusable printing aid on the customer's invoice (absent a written agreement to the contrary); that treats it as sold before use.

Q: Do I still charge my customer tax on the whole job?
A: Yes. The printer collects sales tax on the entire amount billed for the printed material, including any charge for plates or plate materials.

Citations and references

Nebraska Sales and Use Tax Regulation 1-057.05 -- a printer must pay tax on non-reusable printing plates and plate materials it consumes.
Nebraska Sales and Use Tax Regulation 1-057.06 -- reusable printing plates and materials sold to the customer before use may be purchased tax-free for resale.

Source

Original ruling text

REVENUE RULING 1-06-1
April 25, 2006
Sales and Use Tax - Printing Aids. CHARGES FOR PRINTING PLATES AND PRINTING PLATE
MATERIALS CONSUMED IN THE PRINTING PROCESS ARE TAXABLE. PURCHASES OF
MACHINERY AND EQUIPMENT USED IN MAKING THE PLATES ARE ALSO TAXABLE.
Advice has been requested regarding whether amounts billed to a printer for printing plates and
printing plate materials are subject to sales and use tax. For the purposes of this ruling, the term
printing plate materials is limited to those items that become a component part of the plate itself.
Printing plates that are not suitable for reuse and printing plate materials used to make printing
plates which are not suitable for reuse are considered to be consumed by the printer as a supply
item. Such plates and plate materials are not resold to the printer’s customers and therefore, cannot
be purchased by a printer tax-free for resale. Pursuant to Reg-1-057.05 a printer must pay sales or
use tax on its purchases of such printing plates and printing plate materials.
The printer must pay tax on any machinery and equipment that is used primarily to make plates
that are not suitable for reuse. The printer is not considered a manufacturer because it is making
plates that will be consumed by the printer itself. Therefore, such plate-making machinery and
equipment does not qualify for the manufacturing machinery and equipment exemption that is
otherwise available under Nebraska law.
The provisions of Reg-1-057.06 still apply to a printer’s purchase of reusable printing plates and
printing plate materials that become part of reusable printing plates that will be resold before use.
Under Reg-1-057.06, a printer may purchase reusable printing plates tax-free for resale when
the plates are sold to its customer before use. Unless there is a written agreement to the contrary,
printing aids will be considered sold before use when the reusable printing aid is separately listed
and priced on the invoice to the customer.
A printer is required to collect sales tax on the entire amount billed to its customer for the printed
material, including any charge for printing plates or printing plate materials.
APPROVED:

Mary J. Egr Edson
State Tax Commissioner
April 25, 2006

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

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