Are writing and editorial services to produce an annual membership directory taxable, or is the directory manuscript intangible and exempt?

Plain-English summary

Alan/Anthony, Inc. provides a writing and editorial service for a nonprofit trade association's annual membership directory ("Service Guide"), which lists members and detailed information on each. Its work: writing the member listings from client-supplied information, submitting manuscripts to the client's graphics department (a unit of the Port Authority), and proofreading and copy-editing typeset pages before client approval. Typesetting and page layout are done by the graphics department and paid for directly by the client. It asked whether its receipts are taxable.

The Department's answer:

• A manuscript is intangible personal property. Under Regulation § 526.8(c) and Crushing Enterprises, Inc., TSB-A-90(30.1)S, an original manuscript is intangible personal property — not tangible personal property. The "Service Guide" is such a manuscript.
• So the writing/editorial receipts aren't taxable. Because Tax Law § 1105(a) taxes retail sales of tangible personal property, receipts from the sale of the "Service Guide" manuscript and the editorial services performed on it are not subject to sales tax.
• Single-sale (bundling) rule. Under § 1101(b)(3), any sale in which the components cannot be singly purchased is treated as one sale — even if the components can be separately stated, calculated, or estimated (Penfold v. State Tax Commission). So if the writing and editorial services cannot be purchased separately from the "Service Guide" or other taxable services the firm provides, the combination is treated as one and the entire charge is taxable.

What this means for you

Writers, editors, and publishers

Creating an original manuscript — text you write and edit — is the sale of intangible personal property, so the writing and editorial charges are not subject to New York sales tax. The intellectual content, not a taxable physical good, is what you're selling.

Watch who supplies the physical product

Here the taxable physical steps (typesetting, page layout) were done and paid for directly by the client through a separate graphics department. Keeping the tangible-goods production separate from your writing/editorial work helps preserve the nontaxable treatment.

The bundling rule can pull it all into tax

If your writing/editorial service can't be bought separately from a taxable good (like a finished printed directory) or other taxable services, § 1101(b)(3) treats the whole thing as one taxable sale — even if you itemize the pieces. Make the service separately purchasable.

Accountants and tax professionals

The opinion classifies an original manuscript as intangible personal property under Reg. § 526.8(c) (Crushing Enterprises), so § 1105(a) doesn't reach the writing/editorial receipts — subject to the § 1101(b)(3) single-sale rule (Penfold) where components can't be separately purchased.

Common questions

Q: Are writing and editorial services for a directory taxable?
A: No. The directory manuscript is intangible personal property, so the writing and editorial receipts aren't subject to sales tax under § 1105(a).

Q: Why is a manuscript intangible rather than tangible?
A: Regulation § 526.8(c) and Crushing Enterprises treat an original manuscript as intangible personal property — you're paying for the content, not a taxable physical item.

Q: What about the typesetting and printing?
A: In this case those tangible steps were performed and paid for directly by the client through its own graphics department, separate from the writer's nontaxable services.

Q: When would the writing charges become taxable?
A: If they can't be purchased separately from the directory or other taxable services, the § 1101(b)(3) single-sale rule treats the whole charge as one taxable sale.

Q: Does itemizing the invoice avoid the bundling rule?
A: No. Even separately stated components are treated as one sale if they can't be separately purchased.

Citations and references

Statutes and authorities:

• Tax Law § 1105(a) (tax on receipts from retail sales of tangible personal property)
• Tax Law § 1101(b)(3) (definition of "receipt"; single-sale rule for components that can't be separately purchased)
• Sales and Use Tax Regulations § 526.8(c) (an original manuscript is intangible personal property)
• Crushing Enterprises, Inc., Adv. Op. Comm. T&F, Oct. 10, 1990, TSB-A-90(30.1)S; Penfold v. State Tax Commission, 114 A.D.2d 696 (1985)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1992.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a92_42s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-92 (42) S
Sales Tax
May 27, 1992

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S920207B

On February 7, 1992, a Petition for Advisory Opinion was received from Alan/Anthony, Inc.,
145 Avenue of the Americas, 2nd Floor, New York, New York 10013.
The issue raised by Petitioner, Alan/Anthony, Inc., is whether the receipts received from its
client for a writing and editorial service in connection with the publication of an annual membership
directory are subject to sales tax.
Petitioner provides a writing and editorial service, for a nonprofit trade association, for the
publication of an annual membership directory called the "Service Guide". The "Service Guide" lists
the members of the association and provides detailed information on each one.
The services provided by Petitioner include writing of the member listings based on
information provided by the client, submission of manuscripts to the client's graphic department (a
unit of the Port Authority of New York and New Jersey), proofreading and copy editing of the
typeset pages before submission of the manuscripts to the client for approval and contact with the
client. All typesetting and page layout is performed by the graphics department and the costs thereof
are paid directly by the client.
Section 1105(a) of the Tax Law imposes sale tax upon the receipts from every retail sale of
tangible personal property.
Section 1101(b)(3) of the Tax Law defines receipt as "[T]he amount of the sale price of any
property and the charge for any service taxable. . .without any deduction for expenses .... "
In Crushing Enterprises, Inc., Adv Op Comm T&F, October 10, 1990, TSB-A-90(30.1)S the
Commissioner advised that an original handwritten or typewritten lead sheet, musical score, or
arrangement is a manuscript and considered to be intangible personal property and therefore not
considered to be tangible personal property under the provisions of Section 526.8(c) of the Sales and
Use Tax Regulations. The portion of separately stated receipts from the creative fee applicable
thereto will not be subject to the tax imposed on the sale of tangible personal property under Section
1105(a) of the Tax Law. (emphasis added)
Accordingly Petitioner's original annual membership directory called the "Service Guide",
is a manuscript, and, as such, is considered intangible personal property. Crushing Enterprises, Inc.,
supra. Therefore, receipts from the sale of the "Service Guide" manuscript and the editorial services
performed in connection therewith are not subject to the sales tax imposed pursuant to Section
1105(a) of the Tax Law.
TP-9 (9/88)

-2­
TSB-A-92 (42) S
Sales Tax
May 27, 1992

It is noted that the effect of Section 1101(b)(3) is to treat as a single sale any sale in which
any of the components cannot be singly purchased. Thus, even though the components of a particular
sale can be separately stated, calculated or estimated, if they cannot be separately purchased, the
combination of the items listed must be considered as one. Penfold v. State Tax Commission, 114
AD2d 696 (1985); Crushing Enterprises, Inc., Adv Op Comm T&F, October 10, 1990, TSB-A­
90(30.1)S.
Therefore, in the instant case if the writing and editorial services cannot be purchased
separately from the sale of the "Service Guide" or other taxable services provided by Petitioner, the
combination of the items listed must be considered as one, and the entire charge for all items would
be subject to sales tax.

DATED: May 27, 1992

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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