Advertising businesses

# A.

Ad creation. The tax does not apply to charges by an advertising business for professional services in the planning, creating or placing of advertising in newspapers, magazines, billboards, direct mail, radio, television, or other media regardless of how such charges are computed by the advertising business and whether or not such business actually places the advertising in the media.

The tax does not apply to charges by an advertising business for the provision of concept, writing, graphic design, mechanical art, photography and production supervision in the development of an advertising campaign, whether or not all aspects of the campaign are actually performed by the same advertising business. For example, charges by an advertising business for concept, writing, graphic design, mechanical art, photography, etc. . ., provided by another advertising business, for use in the development of an advertising campaign are not subject to the tax.

# B.

Purchases. Advertising businesses are engaged in providing professional services and are the users and consumers of all tangible personal property purchased for use in such businesses. Therefore, the tax applies to all purchases by an advertising business including, without limitation, the following items:

# 1.

Administrative items, including paper, ink, pencils, layout boards, blank audio and video tapes, office furniture, office supplies and similar equipment and supplies;

# 2.

Printing, including direct mail items, non-customized or stock mailing lists, handbills, brochures, flyers, bumper stickers, posters and similar printed materials whether or not for use in the development of a specific advertising campaign, and whether or not any of such materials are intended for distribution out of state (for printing generally, see 23VAC10-210-3010; for catalogs and other printed materials, see 23VAC10-210-260); and

# 3.

Promotional items, including pens, pencils, ash trays, calendars, balloons, t-shirts and similar items whether or not for use in a specific advertising campaign, and whether or not such items are intended for distribution out of state.

In addition, the tax applies to all purchases by an advertising business of concept, writing, graphic design, mechanical art, photography, etc. . ., not made pursuant to the development of a specific advertising campaign. For example, if an advertising business purchases scenic photographs of Virginia for possible use in future advertising campaigns, the purchase of such photographs will be subject to the tax. (For photographs generally, see 23VAC10-210-2050)

# C.

Billing. The tax does not apply to the total charge made by an advertising business for the creation or placement of advertising in the media, regardless of the method(s) used in computing such charge, as for example by fixed fee, hourly rate, percentage of media placed, or other method. Nor does the tax apply to handling fees or cost plus charges added to out of pocket expenses incurred by advertising businesses on behalf of their clients.

For example, if an advertising business contracts to develop a media advertising campaign for its client, and pursuant to such contract is permitted to retain a commission equal to 15% of all media placed during the campaign, and is reimbursed for any out of pocket expenses on an actual cost plus 20% handling fee basis, neither the 15% commission, nor the 20% handling fee would be subject to the tax. (For purchases by an advertising business generally, see subdivision B 2 of this section)