(1)
Introduction. This rule discusses the taxability of the printing
industry. Readers may want to refer to other rules for additional information,
including:
(a) WAC
458-20-141 Duplicating activities
and mailing bureaus;
(b) WAC
458-20-143 Printers and
publishers of newspapers, magazines, and periodicals;
(d) WAC
458-20-13601 Manufacturers and
processors for hire-Sales and use tax exemptions for machinery and
equipment.
(2)
Definition. The phrase "printing industry" includes letterpress,
offset-lithography, and gravure processes as well as multigraph, mimeograph,
autotyping, addressographing and similar activities.
(3)
Business and occupation (B&O)
tax.
(a) Printers are subject to the
B&O tax under the printing and publishing classification upon the gross
income of the business.
(b)
Printers of newspapers. From July 1, 2009, through December 31, 2023, printers
of newspapers are taxable under the publication of newspapers classification of
the B&O tax upon the gross income of the business.
Effective January 1, 2024, printers of newspapers are exempt
from B&O tax under
RCW
82.04.759 on the amounts received from
engaging in printing a newspaper. The exemption amount is reduced by an amount
equal to the value of any expenditure made by the person during the tax
reporting period. For purpose of this section, "expenditure" has the meaning
provided in
RCW
42.17A.005.
Persons reporting income under the publication of newspapers
classification of the B&O tax, or claiming the B&O tax exemption for
income received from engaging in printing a newspaper on or after January 1,
2024, are required to electronically file an annual tax performance report with
the department by May 31st of the following year. Refer to
RCW
82.32.534 and WAC
458-20-267 (Annual tax
performance reports for certain tax preferences) for the specific guidelines
and requirements.
(c)
Doing business inside and outside the state.
RCW
82.04.460 requires that advertising income
earned by printers derived from business activities performed within Washington
be apportioned to this state for tax purposes. Refer to chapter 23 (E2SSB
6143), Laws of 2010 1st sp. sess. Part I for information on apportioning
advertising income.
(4)
Retail sales tax.
(a) The
printing or imprinting of advertising circulars, books, briefs, envelopes,
folders, posters, racing forms, tickets, and other printed matter, whether upon
special order or upon materials furnished either directly or indirectly by the
customer is a retail sale and subject to the retail sales tax, provided the
customer either consumes, or distributes such articles free of charge, and does
not resell such articles in the regular course of business. The retail sales
tax is computed upon the total charge for printing, and the printer may not
deduct the cost of labor, author's alterations, or other service charges in
performing the printing, even though such charges may be stated or shown
separately on invoices.
(b) Sales
of printed matter to advertising agencies who purchase for their own use or for
the use of their clients, and not for resale in the regular course of business,
are sales for consumption and subject to the retail sales tax.
(c) Sales of tickets to theater owners,
amusement operators, transportation companies and others are sales for
consumption and subject to the retail sales tax. Such tickets are not resold by
theater owners or amusement proprietors as tangible personal property but are
used merely as a receipt to the patrons for payment and as evidence of the
right to admission or transportation.
(d) Sales of school annuals and similar
publications by printers to school districts, private schools or student
organizations therein are subject to the retail sales tax.
(e) Sales by printers of books, envelopes,
folders, posters, racing forms, stationery, tickets and other printed matter to
dealers for resale in the regular course of business are wholesale sales. Such
sales are not subject to retail sales tax when the seller obtains a reseller
permit from the buyer to document the wholesale nature of the sale as provided
in WAC
458-20-102 (Reseller
permits).
(f) Charges made by
bookbinders or printers for imprinting, binding or rebinding of materials for
consumers are subject to the retail sales tax.
(g) Sales to printers of equipment, supplies
and materials which do not become a component part or ingredient of the
finished printed matter sold or which are put to "intervening use" before being
resold are subject to the retail sales tax unless specifically exempt (see
subsection (5) of this section). This includes, among others, sales of fuel,
furniture, and lubricants.
(h)
Sales to printers of paper stock and ink which become a part of the printed
matter sold are sales for resale and are not subject to retail sales tax when
the buyer provides a reseller permit (WAC
458-20-102) to the
seller.
(5)
Exemption for sales of computer equipment to printers.
RCW
82.08.806 and
82.12.806 provide a retail sales
and use tax exemption to a printer or publisher for the following:
(a) Purchase and use of computer equipment
primarily used in printing or publishing of any printed materials. This
includes for repair parts and replacement parts of such qualifying equipment.
"Computer equipment" has the same meaning as defined in
RCW
82.08.806 (3)(b).
"Primarily" means greater than 50 percent as measured by time.
RCW
82.08.806 (3)(d).
(b) Sales of or charges made for labor and
services rendered in respect to installing, repairing, cleaning, altering, or
improving the computer equipment.
These exemptions apply only to computer equipment not
otherwise exempt under
RCW
82.08.02565.
(6)
Commissions and discounts.
(a) There is a general trade practice in the
printing industry of making allowances to advertising agencies of a certain
percentage of the gross charge made for printed matter ordered by the agency
either in its own name or in the name of the advertiser. This allowance may be
a "commission" or may be a "discount."
(b) A "commission" paid by a seller
constitutes an expense of doing business and is not deductible from the measure
of B&O tax or retail sales tax. On the other hand, a "discount" is a
deduction from an established selling price allowed to buyers, and a bona fide
discount is deductible under both B&O tax and retail sales tax.
(c) In order that there may be a definite
understanding, printers, advertising agencies and advertisers are advised that
tax liability in such cases is as follows:
(i)
The allowance taken by an advertising agency will be deductible as a discount
in the computation of the printer's liability only in the event that the
printer bills the charge on a net basis; i.e., less the discount.
(ii) Where the printer bills the gross charge
to the agency, and the advertiser pays the sales tax measured by the gross
charge, no deduction will be allowed, irrespective of the fact that in payment
of the account the printer actually receives from the agency the net amount
only; i.e., the gross billing, less the commission retained by the agency. In
all cases the commission received is taxable to the agency.
