Preliminary Art Preliminary art is artwork which is presented to a client for approval of an idea prior to preparation of finished art. Examples of preliminary art would be designs, models, drafts, samples, and layouts. Charges to the client for preliminary art are not taxable if the art is not physically incorporated into the finished artwork and the charge is separately stated or identifiable on the agency's internal records. Any portion of preliminary art that becomes physically incorporated into finished art is taxable. Finished Artwork Finished artwork is the final product to be used for reproduction by the client for display or other advertising purposes.
Tax is due on the charge for finished artwork.
Creation of masters of radio or television commercials for consideration is manufacturing when a copy of the master is sold, held for sale, or otherwise distributed. An advertising agent performs many services which are not taxable when they are not directly related to the sale of tangible personal property. All time and materials are to be included in this cost. The agency must pay tax on materials. If B is for the production of the jingle, the charge is not taxable to the client.