South Carolina Code of Regulations › Chapter 117 - DEPARTMENT OF REVENUE › Article 11 - SALES AND USE TAX REGULATIONS › Section 117-315.3 - Newspaper Publishers

Current through Register Vol. 48, No. 6, June 28, 2024
Newspapers are concerned with three distinct and separate
				activities in the production and publication of the finished product--a
				newspaper. While these operations may be interwoven in the overall production,
				for sales and use tax purposes, a separation must be made. These operations or
				phrases may be designated as follows:
1. News gathering
2. Composition and printing
3. Circulation
News is gathered by reporters, submitted by the public, and
				furnished from other news gathering sources through use of TWX and tape
				monitors. Pictures, mats, and engravings are secured by employees of the
				publisher, submitted by the public, purchased by the printing concern, or
				forwarded by wire from news gathering agencies.
Newspaper publishers customarily utilize machines and equipment
				with which to produce etchings from photographs. The etchings are forwarded to
				the composing room for assembly into page forms, (along with other type and
				engravings) in order to produce the newspaper mat.
Both the news and the advertising copy must go through what is
				known as the composing and stereotyping departments, where type is set by
				machines using what is known as type metal, then put together in page forms,
				and from there going to the stereotype department, where machines are used to
				imprint on what is known as newspaper mats, the type as set in the printing or
				compounding department. From this page mat a plate is cast by machine, using
				composition metal, which after being cast is attached to the printing machine
				or press cylinders and the matter thereon transferred to newsprint running
				through the machines. The metal used in producing the type and also in
				producing the plates is remelted and used over and over again, with the
				necessity of certain parts of it being from time to time refined. The mats used
				in making the plates necessary to complete the finished product are of no value
				after casting the original plate. Advertising mats may be retained for reuse in
				preparing subsequent issues.
Certain large size type is manufactured in the plant and all or
				most of the ordinary size type is manufactured in the plant.
In the preparation of type, etchings, plates, etc., a great
				deal of expensive and complicated machinery is used. In addition to linotype
				machines and other special machines for casting larger sized type, machines are
				used to fabricate "spacer" strips, saws and planners are used to prepare metal
				plates for the page forms, photographic machinery and equipment is used to
				prepare etchings, a complete foundry is maintained for melting, remelting and
				purifying the composition metal, together with other machinery.
Circulation may be effected by use of the mails, by newsboys,
				or other media.
It has been determined that the actual manufacturing process
				begins with machinery used in producing etchings (or plates) and ends with the
				machine used to bundle the finished newspaper for circulation. Excepted from
				the tax under these circumstances would be such machines as linotype and other
				machines used in preparing special type, machines used in transferring images
				from mats to flat metal plates, machines used in transferring images from these
				flat metal plates to newspaper mats, machines used in producing half round
				plates to be used on the printing presses, planners, saws, furnaces, mechanical
				conveyors and the actual printing press itself, together with the integrated
				conveyor thereon. Included also in this category would be the foundry machinery
				for melting and salvaging composition metal, machines used in making metal
				etchings, machinery used for preheating molds (mats) for casting and other like
				machinery.
Also exempted from the tax are such items as flecto sheets,
				seal tonic and toning alloys.
Newsprint paper, aside from being specifically exempted under
				the statute, is likewise an ingredient of the tangible personal property being
				manufactured for sale and is exempted from the tax. The same is true of ink
				which becomes an ingredient or component part of the property being
				manufactured for sale. Ink for any other purposes is subject to the tax.
Items subject to the tax under the above construction would
				consist of photographs, chemicals (except as otherwise noted) used in preparing
				etchings, news gathering equipment (such as tape monitors, TWX, and
				photo-transmission equipment); typewriters used in producing news copy by
				reporters, and of course, office supplies, equipment and machinery, together
				with any machines used in distribution of the finished product.
Engravings are exempted as parts or attachments to machines
				used in manufacturing, compounding or processing tangible personal
				property.
Newspaper mats have been exempted as constituting parts or
				attachments to machinery used in manufacturing tangible personal property.
				Note, however, that on purchases of advertising mats the department has held
				"... that such mats were exempt under the provisions of Section
				12-36-2120
				as being parts or attachments to machines used in manufacturing or processing
				tangible personal property for sale."
"However, the [department] held that catalogs or indices
				supplied in connection with such mat services would constitute the sale of
				tangible personal property and would therefore be subject to the tax."
A new process may make obsolete the linotype, or "hot process."
				Tape perforating machines, a computer and photo composing machinery are used to
				produce positive prints. These prints are affixed to page layouts, the layouts
				photographed and the resulting negatives used to make etchings. The etchings
				may then be used directly on the printing press in lieu of plates now produced
				by use of mats and type metal.
Tape perforating machines, computers and photo composing
				machines may be purchased tax-free when used as outlined above.
No tax is due on purchase of film and plates used in making
				etchings and engravings and chemicals which become a part of a finished etching
				or engraving. The exemption does not extend to film and chemicals used by
				reporters and other news gatherers.
Chemicals used directly in developing film and etching
				engravings for use by the publisher in manufacturing a newspaper may be
				purchased tax-free provided the machine in which the chemicals are used is
				exempted by Section
				12-36-2120(17).