When a photographer briefly lends a client a print or transparency just to reproduce it (then gets it back), is that a taxable sale?

Plain-English summary

Jim Bush Photography is a commercial photographer. A client hires him to shoot images for a promotional publication; he then lets the client temporarily hold a print or transparency only to reproduce it. The client may not alter or retouch the image and must return it (typically within a year), and Jim Bush keeps ownership — he can even license the same shot to another client, including a competitor. He asked whether that temporary transfer is a taxable sale.

The Department said no — these reproduction-right charges are not taxable.

• Granting a reproduction right is not a sale or a license to use. Under Tax Law § 1105(a) and 20 NYCRR § 526.7(f)(1)-(2), giving someone the right to reproduce an image is not a license to use tangible personal property and not a sale, so it is not taxable.
• Temporary possession for reproduction doesn't count as a taxable transfer. Merely holding the print or transparency long enough to make the reproduction is not the kind of "transfer of possession" that would convert the reproduction right into a taxable license — following Matter of Vignelli Associates (TSB-H-81(26)S) and Frissell v. McGoldrick, 300 N.Y. 370 (1950).
• Made-to-order doesn't change it. That the photographer produced the print/transparency specifically for that client doesn't make it a sale, because the client did not alter it and returned it after reproducing it.

The trade-off on the photographer's side: when he produces negatives or transparencies to grant reproduction rights, he is not producing tangible personal property for sale. So if more than 50% of his negatives/transparencies go to reproduction-right transactions, he is not manufacturing/processing property for sale — and his purchases of equipment, tools, supplies, and services are all taxable (no production or resale exemption).

What this means for you

Selling the right to reproduce an image is not selling the image. If your client only reproduces the photo and hands the physical print or transparency back, unaltered, with you keeping ownership, that reproduction fee is not subject to sales tax in New York.

Keep the terms tight. The exemption rested on real limits: no alteration or retouching, mandatory return, and the photographer retaining ownership. Invoices that stamp a defined "Period of Use" and reserve all rights to the photographer support that treatment. If instead you sell the print or transparency outright, that's a taxable sale of tangible personal property.

Watch your own purchase side. Because reproduction-right work is not "producing property for sale," a photographer who mostly does reproduction-rights business loses the production/resale exemption on his gear and supplies — those purchases are taxable. Track whether more than half of your output is reproduction-rights vs. outright sales.

Common questions

Q: I let a client use my transparency for a year to run an ad, then they return it. Do I charge sales tax?
A: No. Granting the right to reproduce, with the image returned unaltered and ownership staying with you, is not a taxable sale or license under § 1105(a) and 20 NYCRR § 526.7(f).

Q: I made the print specifically for this one client — doesn't that make it a sale?
A: No. The Department said custom production doesn't change the result, as long as the client didn't alter the print and returned it after reproduction.

Q: Then can I buy my cameras, film, and supplies tax-free as items used to produce property for sale?
A: Generally no, if reproduction rights are your main business. When you produce images to grant reproduction rights you are not producing property for sale, so if more than 50% of your negatives/transparencies are used that way, your equipment, tools, supplies, and services are taxable.

Citations and references

Statute, regulation, and cases:

• Tax Law § 1105(a) — imposes tax on receipts from retail sales of tangible personal property
• 20 NYCRR § 526.7(f)(1)-(2) — granting a right to reproduce is not a license to use or a sale; mere temporary possession or custody for making a reproduction is not a transfer of possession that converts a reproduction right into a taxable license
• Matter of Vignelli Associates, Ltd., State Tax Commission, TSB-H-81(26)S — temporary transfers of possession for reproduction only, without a right to alter or retouch and with title remaining in the transferor, are not taxable sales
• Matter of Frissell v. McGoldrick, 300 N.Y. 370; 91 N.E.2d 305 (1950) — temporary possession for reproduction is not a taxable transfer

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1988.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a88_48s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-88 (48)S
Sales Tax
September 20, 1988

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S880614A

On June 14, 1988, a Petition for Advisory Opinion was received from Jim Bush Photography,
1685 Elmwood Avenue, Loft 304, Buffalo, New York 14207.
The issue raised is whether the temporary transfer of possession of a photographic print or
transparency for the purpose of reproducing such photographic print or transparency constitutes a
taxable sale.
Petitioner, a commercial photographer, is in the business of rendering photographic services
wherein a client will contact Petitioner for consultation regarding a display or photographic
reproduction desired for inclusion in a promotional publication. Petitioner will meet with the client
to determine the nature of the client's promotional objective and to provide the client with
recommendations as to the nature of photographic content which would best suit the project.
If engaged by the client, Petitioner proceeds to take the desired shots either at Petitioner's
studio or another site. Petitioner then processes the original film to produce either negatives or
transparencies. The client is provided with either a print produced from a negative or a transparency,
depending on whether Petitioner produced a negative or a transparency from the original film.
Because a print produced from a negative can be used for reproduction, the negative can be retained
by Petitioner. However, because a transparency serves as both negative and print, the transparency
must be delivered to the client.
When a client is granted the right to reproduce a print or a transparency the reproduction is
to be used solely for the purpose for which the photograph was originally intended. The print or
transparency is loaned out to the client for a specific period of time and must be returned to
Petitioner in its original form without alterations or retouching. Because Petitioner retains ownership
of the print or the transparency, Petitioner can make the transparency or print of the original negative
available to any other client to whom he may wish to grant reproduction rights, even to a competitor
of the original client. Petitioner has the right to sell the original negative or transparency, although
it is seldom done.
The invoice which Petitioner presents to his client contains certain conditions. "Period of
Use" is stamped on the front with the period of time the client can use the print or transparency
inserted after the phrase. (The normal period allowed is one year.)
The invoice also states that use is subject to terms and conditions on the reverse side. The
legend on the back states, in part, "Grant of reproduction rights is conditioned on receipt of payment
in full. All rights expressly granted remain the exclusive property of Photographer. ..." The legend
also contains wording providing for copyright and trademark protection being the sole right of the
applicant.
TP-9 (9/88)

-2­
TSB-A-88 (48)S
Sales Tax
September 20, 1988

The taxability of temporary transfers of tangible personal property has been addressed in
Matter of Vignelli Associates, Ltd., et. al. State Tax Commission, February 11, 1981, TSB-H­
81(26)S. Therein the State Tax Commission determined "That since the transfers of possession...
were temporary for the purpose of reproduction only, without the right to alter or retouch the same,
title thereto at all times remaining in Vignelli Associates, Ltd., they did not constitute taxable sales."
Pursuant to 20 NYCRR 526.7(f)(1) and (2), the granting of a right to reproduce is not a
license to use or a sale and is not taxable. Mere temporary possession or custody for the purpose of
making a reproduction is not deemed to be a transfer of possession which would convert the
reproduction right to a license to use. (Matter of Frissell v. Mc Goldrick, 300 N.Y. 370; 88 N.Y.S.
2d 896; 91 N.E. 2d 305 (1950).)
The transfer of prints from original negatives and transparencies by Petitioner to his
customers under the circumstances described herein does not constitute a license to use or the sale
of tangible personal property under section 1105(a) of the Tax Law. The fact that the prints and
transparencies were produced by Petitioner specifically for his customers does not change the nature
of the transaction. The facts remain that Petitioner's customers did not alter or change the prints or
transparencies and returned them to Petitioner after the necessary steps were taken for reproduction.
Accordingly, Petitioner's charges to his customers are not subject to state or local sales tax.
However, when Petitioner produces negatives or transparencies for the purpose of granting a right
to reproduce, Petitioner is not producing tangible personal property for sale. If more than 50% of
the negatives and transparencies produced by Petitioner are used for transactions wherein the client
is granted the right to reproduce the photo or transparency, Petitioner will not be considered to be
producing tangible personal property for sale by manufacturing, processing, etc. All purchases of
equipment, tools, supplies and services by Petitioner will be subject to state and local tax.

DATED: September 20, 1988

FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.