Pennsylvania Code › Title 61 - REVENUE › Part I - Department of Revenue › Subpart B - General Fund Revenues › Article II - Sales and Use Tax › Chapter 31 - IMPOSITION › SPECIALIZED TYPES OF BUSINESS OR PROPERTY › Section 31.21 - Advertising agencies

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
Purchases.
Purchases by advertising agencies shall be taxed in
						accordance with the following:
(1)
Materials used or consumed in rendering professional services.
Advertising agencies that provide professional services are the ultimate
						consumers of tangible personal property used or consumed by them in the
						preparation and placing of advertising in magazines, newspapers, and on radio
						and television when no tangible personal property is tranferred to the
						purchaser other than proofs or samples for his approval, comment, criticism,
						information or other similar purposes. Purchases of office supplies, paper,
						ink, paint, art work from independent artists, engraver's charges for metal
						plates, mats and other materials used or consumed in this type of work is
						subject to tax. For example, an advertising agency is the ultimate consumer of
						the mats and all other tangible personal property it uses or consumes in the
						preparation of the mats.
(2)
Tangible personal property purchased on behalf of specific
						clients.
Advertising agencies rendering professional services, (that
						is, market and public relations counseling, copy writing, art or creative
						direction, placement and supervision of media and graphic arts purchases on
						behalf of specific clients) shall pay sales tax on all purchases of tangible
						personal property for specific client accounts to the exact degree that the
						respective client would be liable if purchasing the materials directly from
						primary suppliers. Certification that the authorized purchase of specific
						tangible property falls within any exempt category can originate only with the
						client and shall be furnished to the agency in writing stating the basis on
						which exemption is claimed. The agency may then inform the pertinent supplier
						or suppliers on the client's behalf, providing a duly executed exemption
						certificate indicating the basis for the exemption.
(3)
Materials purchased for
						resale.
Advertising agencies are entitled to claim the resale
						exemption on purchases of tangible personal property which they directly resell
						or incorporate into products which they resell. Circulars, signs, mats, show
						cards, posters and other similar tangible personal property are deemed to be
						resold by advertising agencies. For example, when an advertising agency
						prepares and sells signs to a client, it shall collect tax on the purchase
						price, but is entitled to claim a resale exemption on materials which become
						part of the signs. Similarly, when an advertising agency contracts to provide
						mats to a client who in turn will forward the mats to its dealers throughout
						the country, the advertising agency shall collect tax on the price charged for
						the mats, but is entitled to claim a resale exemption on the purchase of the
						mats from the mat maker. The exemption does not apply to the purchase of the
						art work, paper and ink, which is used by the agency in preparing the mock-up
						of the mat for the mat maker since the materials used in preparing the mock-up
						are not resold to the client.
(4)
Limited application of printing exemption.
Printing engaged in
						as a business is included in the definition of manufacturing. See section 201
						of the TRC (72 P. S. §
														7201) and
						§
													32.32 (relating to manufacturing;
						processing). The sale of taxable property to an advertising agency is not
						subject to a claim of exemption on the theory that the purchased property is to
						be directly used in printing operations unless the agency itself is actually
						engaged in the business of printing. The exemption is not applicable to
						purchases by advertising agencies of tangible personal property such as paper,
						ink, mats, plates and similar property which are used in the preparation of or
						form a part of mock-ups or similar items which are transferred to printers or
						other persons for use in reproduction.