S.C. Code Regs. 117-315.3 — Newspaper Publishers

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 manufac-
tured 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 '' TTT 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).