Which charges for developing Texas video training seminars, manuals, master tapes, and copies were taxable?

Plain-English summary

An internal Comptroller memo addressed a taxpayer that developed video training seminars and sometimes researched, wrote, and edited accompanying manuals.

Developing the video seminar was not taxable. Charges for researching, writing, and editing the accompanying manual were also not taxable, but the developer owed tax on materials it used during that development work.

The taxpayer had to collect tax on charges for copies of the master training video, copies of the manual, and other training materials sold to the client. It could give a resale certificate instead of paying tax on component parts or duplication charges used to make those copies.

What this means for you

The memo separated the creative development service from the physical or duplicated training products delivered to the customer. Development was nontaxable, while copies and other training materials were taxable sales.

Common questions

Was developing the video training seminar taxable? No.

Were research, writing, and editing charges for the manual taxable? No.

Who owed tax on materials used during development? The seminar developer.

Were copies of the master video or manual taxable? Yes, along with other training materials sold to the client.

Could inputs used to make copies be bought for resale? The memo said component parts and duplication charges for copies could be covered by a resale certificate.

Citations and references

The memo did not cite a statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9101L1067D07

Original ruling text

January 15, 1991

To: Melanie Bowman

From: Adina Whittemore

Subject: ***

The taxpayer develops video training seminars for their customers.
The development may include researching, writing, and editing train-
ing manuals.

The taxpayer collects tax on any charges for copies of the manuals.
However, the taxpayer is not collecting tax on the research and de-
velopment of the manual.

The development of the video training seminar is not taxable. This
includes any charges for researching, writing and editing an accom-
panying manual. The taxpayer owes tax on any materials used during
this process.

The taxpayer should collect tax on any charges for copies of the
master video training tape, any charges for copies of the manual,
and any other training materials sold to the client. The taxpayer
may give a resale certificate in lieu of tax on any components parts
or duplicating charges for copies.