Is pre-press equipment (mag etching, rubber plates, film master, velox print, photopolymer-to-engraving conversion) that a manufacturer buys to print its own packaging artwork exempt from Texas sales tax?

Plain-English summary

A manufacturer that buys printing dies and related items from a graphics company to print its own product packaging asked which specific pre-press items are exempt from Texas sales tax: mag etching, rubber, plates, film master, velox print, and converting photopolymer film to engravings.

The Comptroller pointed to a brand-new legal change: House Bill 3211, passed in the 76th Texas legislative session (1999), added § 151.318(t), exempting "pre-press machinery, equipment, and supplies... necessary and essential to and used in connection with the printing process" — specifically listing computers, cameras, film, film developing chemicals, veloxes, plate-making machinery, plate metal, litho negatives, color separation negatives, proofs of color negatives, production art work, and typesetting/composition proofs. This exemption applies to a person engaged in printing/imprinting tangible personal property for sale, or producing certain free general-interest newsprint publications.

Applying that new provision here: a manufacturer printing product instruction guides, or wrapping and packaging that is sold with the product, qualifies for the exemption — covering the pre-press items the manufacturer asked about.

What this means for you

Manufacturers who print their own packaging, labels, or instruction materials

Pre-press equipment and supplies used to produce your product's packaging artwork, container printing, or instruction inserts can be purchased tax-free under the 1999-added § 151.318(t), as long as the printed material is sold with your product (packaging) or is itself part of what you're printing for sale.

Accountants and tax professionals

This is a companion ruling to other 1999 letters applying the same newly enacted § 151.318(t) to different industries (photographers, print shops). It confirms the pre-press exemption's reach extends to manufacturers printing their own packaging and product literature, not just dedicated commercial printers.

Common questions

Q: Is a manufacturer's own packaging artwork/pre-press equipment exempt from Texas sales tax?
A: Yes, under the newly added Sec. 151.318(t) (House Bill 3211, 1999), if it's necessary and essential to printing packaging or product materials sold with the product.

Q: What specific items does the exemption cover?
A: Computers, cameras, film, film developing chemicals, veloxes, plate-making machinery, plate metal, litho negatives, color separation negatives, proofs, production artwork, and typesetting/composition proofs — among other pre-press items.

Q: Does the exemption cover only packaging, or also things like instruction guides?
A: Both — the letter confirms product instruction guides qualify alongside wrapping/packaging sold with the product.

Q: Can another manufacturer rely on this letter?
A: Only the taxpayer who requested it can use it for detrimental reliance, and the letter is based on the facts presented — but the underlying statutory change (Sec. 151.318(t)) applies generally to qualifying manufacturers.

Citations and references

Statutes:

• Tex. Tax Code § 151.318(t) — pre-press machinery/equipment/supplies exemption (added by House Bill 3211, 76th legislative session, 1999)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9910825L

Original ruling text

October 25, 1999

via fax **

Dear **:

Thank you for your fax of October 8, 1999 concerning manufacturing exemptions.

You are a manufacturer. You have purchased printing die and related items from
a graphics company for your packaging of products. You ask which of these
items are exempt: mag etching, rubber, plates, film master, velox print,
converting photopolymer film to engravings.

Response. House Bill 3211 passed in the 76th legislative session. It
clarified several exemptions for manufacturers and included Section 151.318(t)
that states:

(t) In addition to the other items exempted under this section, pre-press
machinery, equipment, and supplies, including computers, cameras, film, film
developing chemicals, veloxes, plate-making machinery, plate metal, litho
negatives, color separation negatives, proofs of color negatives, production
art work, and typesetting or composition proofs, that are necessary and
essential to and used in connection with the printing process are exempted from
the tax imposed by this chapter if they are purchased by a person engaged in:

(1) printing or imprinting tangible personal property for sale; or

(2) producing a publication for the dissemination of news of a general
character and of a general interest that is printed on newsprint and
distributed to the general public free of charge at a daily, weekly, or other
short interval.

A manufacturer printing product instruction guides or wrapping and packaging
which are sold with the product qualifies for the above exemption.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change. You may call me toll free at
1-800-531-5441, ext. 5-0613. The direct line is 512/475-0613. You may also
write to Tax Policy Division, Comptroller of Public Accounts.

Sincerely,

Kevin Koller
Tax Policy Division