Is producing a sonogram video tape for expectant mothers subject to Texas sales tax?

Subject

Ultrasound Images/Sonogram Of Unborn Child — Sold Via Album/Images/Videotape To Expectant Mothers

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9401L1284F07

Plain-English Summary

A business asked the Texas Comptroller about the sales tax treatment of producing a finished video tape — specifically a sonogram video tape made for expectant mothers. The Comptroller ruled that the total charge for producing the sonogram video tape is taxable.

Because the finished video tape is a taxable product being sold to the customer, the business itself does not have to pay sales tax on its own input materials that become part of that product. Specifically, the business may purchase blank video cassettes tax free by issuing a resale certificate to its supplier, since those cassettes are being resold (in finished form, containing the sonogram video) to the expectant mother as part of the taxable charge.

The ruling is short and fact-specific: the Comptroller notes the opinion is based on the facts presented, and different facts, though similar, might lead to a different answer.

What This Means For You

If you produce sonogram videos, images, or albums for expectant mothers (or similar finished video/photo products): Charge and collect Texas sales tax on your total charge to the customer for producing the finished video tape.

If you buy blank video cassettes (or similar materials) that become part of a taxable product you sell: You can buy those materials tax free from your supplier by issuing a resale certificate, since you're passing the cost through as part of a taxable sale rather than consuming the materials yourself.

If your facts differ (for example, a different product, delivery method, or business arrangement), this ruling may not apply — the Comptroller explicitly limited the ruling to the facts presented.

Q&A

Q: Is the charge for producing a sonogram video tape of an expectant mother subject to Texas sales tax?
A: Yes. The Comptroller ruled that the total charge for producing a sonogram video tape of expectant mothers is taxable.

Q: Can the business avoid paying sales tax on the blank video cassettes it uses to make the sonogram tapes?
A: Yes. The business may purchase blank video cassettes tax free by issuing a resale certificate to its supplier, since the cassettes become part of the taxable finished product sold to the customer.

Q: Does this ruling apply to every business producing similar videos regardless of the facts?
A: Not necessarily. The Comptroller stated the opinion is based on the specific facts presented, and different facts, though similar, might lead to a different answer.

Original ruling text

January 27, 1994

Dear ****:

This is in response to your letter dated January 18, 1994, regarding
sales tax as it applies to producing a finished video tape.

The total charge is taxable for producing a sonogram video tape of
expectant mothers. You may purchase blank video cassettes tax free by
issuing a resale certificate to your supplier.

This opinion is based on the facts presented. Different facts, though
similar, might lead to different answers. If you have any questions or
need more information, please write or call me toll free at 1-800-531-5441,
extension 50330, or 512-475-0330.

Sincerely,

Bettie Peterson
Tax Administration Division

NOTE: Previous Accession Number 9401017L