Were custom poems taxable when recited as entertainment, sold in written form, or given away as gifts?

Plain-English summary

A business wrote original poems for special occasions and either delivered and recited them at parties or sold them in written form.

Delivering and reciting a poem as entertainment was a nontaxable service. The poet paid tax on paper, ink, and other materials used to provide that service.

Selling a written poem was a taxable sale of tangible personal property, with tax due on the total charge. The poet could give suppliers a resale certificate for items such as paper that were transferred to the customer.

Giving a poem to a friend did not require charging tax on the gift, but the poet still paid tax on the materials used.

Common questions

Was a delivered and recited poem taxable? No.

Was a written poem taxable? Yes, on the total charge.

Could paper transferred with a written poem be bought for resale? Yes.

Was tax charged on a gifted poem? No, but the giver paid tax on the materials.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8606L0740B01

Original ruling text

June 13, 1986

Dear ***:

Thank you for your letter of May 27, 1986, concerning tax on original
poems.

Your new business will be writing poems for special occasions. Your
poems may be delivered and recited at parties as entertainment or sold
in written form.

If you deliver and recite the poem as entertainment, then you are
providing a non-taxable service. You should pay tax on all materials
and supplies (paper, ink, etc.) you use to provide the service.

If you sell the poems in written form, then you are selling tangible
personal property and tax is due on the total charge. You may provide your
suppliers a resale certificate in lieu of tax on items transferred to your
customer i.e., paper.

Of course, if you give a poem to a friend, you do not need to charge them
tax on the gift. You should pay tax on all of the materials and supplies
you use.

Good luck in your new venture.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at
the Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division