When a commercial-production company gives its raw daily footage ('dailies') to the client at no extra charge, alongside the paid final production, does it owe sales tax on that transfer?

Plain-English summary

A video production company asked about the tax treatment of "dailies" — the raw, unedited shots filmed each day during production of a commercial, viewed at the end of the day and considered for use in the final product (also called raw footage). After the dailies are edited and music is added, they become the finished master or final product. The client already pays for all the labor and materials that go into that finished product, including any sales tax due on those costs, and separately pays the company for its production services.

The company's question was specifically about giving the dailies themselves to the client, on top of the paid final product, with no additional payment, service, or property exchanged in return. The Comptroller ruled that no sales tax is due on that transfer, because there is no consideration — no money, service, or property changes hands for the dailies specifically.

What this means for you

Video and commercial production companies

If you hand over raw daily footage to a client at no additional charge — as a courtesy or as part of the overall production relationship, separate from any charge for the finished product — that transfer itself does not trigger sales tax, because nothing of value is exchanged for it specifically.

Advertising agencies and production clients

Don't assume every deliverable a production company hands you carries a separate tax charge. If the dailies are given to you for free alongside a paid final product, no tax applies to that particular hand-off.

Accountants and tax professionals

The holding rests entirely on the absence of consideration for the dailies transfer — Texas sales tax attaches to sales of taxable items or services for consideration. Where a client already pays fully for the final production (with tax on labor/materials passed through as appropriate), an additional free transfer of related raw material carries no separate tax exposure.

Common questions

Q: Do I owe sales tax when I give a client the raw footage from a shoot?
A: Not if the client pays nothing extra and gives nothing in return for it — this letter confirms no tax is due when dailies are transferred with no consideration.

Q: What if the client pays a separate fee specifically for the dailies?
A: This ruling only addresses a transfer with no consideration. A separate charge for the dailies would need its own analysis of whether that charge is for a taxable service or property.

Q: Does this mean the whole production is tax-free?
A: No. The letter notes that labor, materials, and any applicable sales tax on the final production's costs are still passed along to the client as usual — only the free transfer of the dailies themselves is addressed here.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200006405L

Original ruling text

June 12, 2000

From: Gilbert Zamora

To:

Subject: Sales Tax Question

Dear **:

Thank you for your e-mail inquiry concerning taxability of the transfer of
dailies to customers.

For your information, dailies are shots filmed during a day for the production
of a commercial. These shots are viewed at the end of each day of filming and
are considered for use in the final product. Dailies are also known as raw
footage. After the dailies are edited and music is added, the master or final
product is produced. All costs which include labor and materials as well as
any applicable sales tax have been paid and passed along to our client.
Consequently, the client then pays us for our services and for all costs
related to the development of the commercial.

In giving these dailies to our client, we will not receive any form of
consideration in return for them. Hence, there will be no exchange of money,
services or property.

Response: Sales tax is not due on the transfer of the dailies to your clients.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, please call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Policy Division,
Comptroller of Public Accounts. You may also e-mail our tax help section at:

Tax Policy Division