Effective Date: December 19, 2000

Re: Printers' Purchases and Sales

The purpose of this Tax Bulletin is to give an overview to the printing industry of Tax Commission rule R865-19S-80, Printers' Purchases and Sales, recently amended ("Rule 80S"). Please note that this Tax Bulletin supercedes Tax Bulletin 8-89.

Purchases By A Printer

Purchases of items that become an integral or component part of the printed matter

Rule 80S provides that printers may purchase tax free for resale any materials that become an integral or component part of the finished printed material they sell.

Example: Printer A purchases glue and stitcher wire to use in binding printed materials. Printer A's purchases of the glue and stitcher wire are purchases of tangible personal property that will become an integral or component part of the finished printed material. Accordingly, Printer A's purchases of the glue and stitcher wire are exempt from sales or use tax. 

Example: Printer A purchases embossed paper, on which it will print invitations, from an engraver. Printer A's purchase of the embossed paper is a purchase of tangible personal property that will become an integral or component part of the finished printed material. Accordingly, Printer A's purchase of the embossed paper from the engraver is exempt from sales or use tax.

Purchases of items that are used or consumed by the printer 

Tangible personal property purchased by a printer that does not become an integral or component part of the finished printed material is consumed by the printer and, as such, is subject to sales or use tax.

Example: Printer A purchases conditioners, solvents, developers, and cleaning agents. All of these items are necessary in the production of the final printed product, however, none of these items remain with the final printed product but are consumed by Printer A in the production process. As a result, Printer A's purchases of conditioners, solvents, developers, and cleaning agents are purchases of tangible personal property subject to sales or use tax.

Purchases of pre-press materials

Rule 80S defines pre-press materials as materials that: 

1. are reusable;
2. are used in the production of printed matter;
3. do not become part of the final printed matter; and
4. are sold to the customer.

Pre-press materials include film, magnetic media, compact disks, typesetting paper, and printing plates.

Pursuant to the rule, a printer may purchase pre-press materials tax free if the printer's invoice, or other written material provided to the purchaser, states that reusable pre-press materials are included with the purchase. The statement need not describe the pre-press materials, and may not restrict the purchaser from taking physical possession of those materials.

Purchases of graphic design services

The amendments to Rule 80S provide that a printer's purchase of graphic design services is exempt from sales and use tax if the purchase meets the requirements set forth in Tax Commission rule R865-19S-111, Graphic Design Services. For a detailed explanation of the provisions of the graphic design services rule, please see Tax Bulletin 15-00. 

Sales By A Printer

A printer must collect sales and use tax on the following:

1. charges for printed material, even though the paper may be furnished by the customer;
2. charges for envelopes;
3. charges for services performed in connection with the printing or the sale of printed matter, such as cutting, folding, binding, addressing, and mailing;
4. charges for pre-press materials purchased tax exempt by the printer; and
5. charges for reprints and proofs.

Except as noted below, sales by a printer are exempt from sales and use tax if the sale qualifies for exemption under Section 59-12-104; and the printer obtains an exemption certificate from the purchaser. 

In the case of sales of pre-press materials, the following standards apply.

1. If the printer's customer is purchasing printed material for resale, but will not resell the pre-press materials, the printer must collect sales and use tax on the pre-press materials.
2. If printed material is shipped outside of the state, charges for pre-press materials are exempt from sales tax as a sale of goods sold in interstate commerce only if the pre-press materials are physically shipped out of state with the printed material. If pre-press materials are retained in the state by the printer for any reason, the pre-press materials do not qualify for the sales tax exemption for goods sold in interstate commerce, and as such, the printer must collect sales tax on the part of the transaction relating to the pre-press materials.

Finally, if a sale by a printer consists of items that are subject to sales and use tax as well as items or services that are not taxable, the nontaxable items or services must be separately stated on the invoice or the entire sale is subject to sales and use tax.

To ask questions regarding this Tax Bulletin, please call Taxpayer Services at (801) 297-2200 or call toll free 1-800-662-4335. To submit questions in writing, mail to Taxpayer Services, 210 North 1950 West, Salt Lake City, UT 84134. Those who have impaired hearing may call the Telecommunications Device for the Deaf (TDD) at (801) 297-2020.