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Sales Tax Application

I just went to a Sales Tax Seminar put on by AAAA's which greatly enlightened me regarding the sales tax regulations in California (which have just undergone a big change). In the past I have been not paying sales tax to my vendors and then taxing the entire invoice for any job that resulted in something tangible being transferred to the client.

This is what I learned. The creative services portion is non-taxable because it is a service. Under the old regulations there was room for discussion as to how much of the services were "final" art verses "preliminary art". We went the safe way and over taxed. The new regulations specifically state that 75% of the charge for a job can be considered "non-taxable" services.

If you are a California agency how are you taxing your jobs that include a tangible object? Do you tax at the task level and make sure that the preliminary time on a job is 75% of the total time and therefore not taxed? Your input would be greatly appreciated!

Thanks!

Ann Adams Controller J. Stokes & Associates
www.jstokes.com

We tax 75% of the creative services and use a creative service-taxable task and use a creative service-non-taxable task for the remaining 25%. Tangible tax items are taxable therefore they are listed separately and taxed. Hope this helps you.

Arlene Mowles