Opinion ID: 2381394
Heading Depth: 1
Heading Rank: 2

Heading: Sales of Original and Duplicate Videotapes

Text: Videotech produced, edited, and duplicated an instructional videotape depicting repair and maintenance of a high-pressure fluid jet cutting system; it produced original videotapes of various events, such as automobile accident reconstructions, and annual reports and depositions for attorneys, manufacturers, and an Arabian horse farm; it also provided audio engineering and dubbing for a furniture manufacturer's tapes produced elsewhere. Ms. Gammaitoni contests the Commission's determination that sales of these original and duplicate videotapes were subject to Missouri sales tax, arguing they were nontaxable services rather than sales at retail. See James v. TRES Computer Systems, 642 S.W.2d 347. James held that computer data and programs sold by an out-of-state corporation to a Missouri bank were intangible personal property and their placement on magnetic tapes did not convert them into tangible personal property, reasoning that the tapes were not the ultimate object of the sale, but rather the medium on which the objectthe information they containedwas placed; the information could have been fed directly into the computer via electronic communications, without using the tapes. Two years earlier, in Universal Images v. Department of Revenue, 608 S.W.2d 417 (Mo.1980), this Court had held filmed commercials, which Universal ordered to its specifications from an out-of-state laboratory and then rented to theaters to display advertising material on motion picture screens, were subject to the use tax on tangible personal property. This Court distinguished James from Universal, stating the magnetic tapes were not like the films because the actual presence of the movie film itself was essential to transmit the work of the actors. James, 642 S.W.2d at 350. In this case, it was the videotape itself that was the object of the transaction. Unlike the bank in James , Videotech's customers already possessed the information  and ideas, which they presented to Videotech to be placed on the medium of the videotape. As in the case of the movie films, or any manufactured article of tangible personal property, the finished videotape was the true object of the transaction; therefore, the sales of the videotapes were subject to Missouri sales tax as taxable personal property. The same analysis applies to the sales of the duplicate videotapes. The object of the transaction was the duplicate of the tape, and the services Videotech rendered in manufacturing the duplicate tapes were incidental to their sale.