NAC372.130. Advertising agencies.

     1. As used in this section, an “advertising agency” is a person who is primarily in the business of furnishing advertising and promotional services to clients.

     2. An advertising agency is the consumer of all the tangible personal property used in the normal course of the business, such as ink, rubber cement and other items used for the purposes of the agency.

     3. The development of primary advertising materials on behalf of a client for delivery to the print or broadcast media, a printer or a supplier is principally a service and the charges for such materials are not subject to the sales tax. As used in this subsection, the phrase “development of primary advertising materials” includes all activities involved in the conceptualization, production and refinement of the advertisement or public relations material before its subsequent reproduction by a printer or supplier. The gross receipts from primary advertising materials produced before reproduction are not subject to the sales tax regardless of their form because the development of these materials for the specific benefit of a particular client will be considered a service. These services may include, without limitation, rough or comprehensive visualizations, consultation, market analysis, writing of scripts or copy, creation of preliminary and final artwork or photographs, typesetting, typography, or placing or arranging for the placing of advertisements in newspapers, magazines, publications, television, radio or other advertising media. The sales tax does not apply to a charge billed as an agency fee, service charge or commission if it represents a charge or part of a charge for a service that is not subject to the sales tax.

     4. The sales tax applies to the gross receipts from the creation of reproductions of the primary advertising materials, whether the reproduction is performed by a printer or supplier or is performed directly by the advertising agency.

     5. An advertising agency may act as a purchasing agent for a customer for the acquisition of reproductions of primary advertising materials from a printer or supplier and pay the tax at the time of purchase from the printer or supplier if it:

     (a) Obtains prior written authorization from the customer to purchase the reproductions on his or her behalf;

     (b) Discloses to the printer or supplier the name of the customer for whom the reproductions are being purchased;

     (c) Charges the customer for the reproductions an amount not to exceed the amount paid by the advertising agency, including the tax;

     (d) Lists separately the charges to the customer set forth in paragraph (c) on the statement to the customer; and

     (e) Does not use the reproductions for itself or any other customer.

     6. The sales tax does not apply to any charges for:

     (a) Supervision, consultation, research, postage, express, telephone and telegraph messages, transportation and travel expenses, or talent fees, if the charge is stated separately on the invoice or is part of a charge for other services.

     (b) Retouching to prepare artwork or photographs for reproduction.

     [Tax Comm’n, Combined Sales and Use Tax Ruling No. 51, eff. 6-7-68]—(NAC A 11-12-93; 7-5-94)