NAC372.227. Designers.

     1. As used in this section, the term “designer” means a graphic designer or a commercial artist and designer who is primarily engaged in, and derives income from, providing stylized visual communication through the professional application of creative services which may be expressed in the form of graphic representations used for promotional, advertising or publication purposes, including, without limitation, commercial art and design for logos, stationery, advertisements, brochures, catalogs, newsletters and magazines.

     2. Purchases of tangible personal property by designers are subject to the sales tax if such property is acquired for use in the operation of the business. As an example of the application of this subsection, if a designer purchases office supplies, art supplies, computer equipment, computer software or other devices for use in the normal course of business and not to be transferred in the performance of a service, the designer is the consumer of the tangible personal property and must therefore pay the sales tax at the time of purchase.

     3. In cases where a contract, commonly referred to in the industry as an “assignment,” for graphic services is executed which requires the development of concepts and ideas, this constitutes the sale of professional services and sales tax does not apply. Drawings, visualizations and concept roughs which are prepared by the designer to convey ideas and concepts to clients will be treated as having been created incidentally in the performance of a service. As an example of the application of this section, if a company places an order for a designer to provide a corporate logo for use in promotional activities, the gross receipts from the consultation, concept and development, preliminary designs and first rendering of the final design are not subject to sales tax because the charge is for the services provided in producing and developing the design and the transfer of any tangible personal property is incidental to the performance of the services provided in the development of the design.

     4. If a designer, in addition to providing creative services as described in subsection 3, also provides reproduction services, the designer is a retailer of the copies that are sold and the gross receipts derived therefrom are subject to the sales tax, except that, if a part of the charge for the copies is for services associated with the creation of the first rendering and that portion of the charge is separately stated on the invoice, the portion of the charge that is attributable to services is not subject to the sales tax. As an example of the application of this subsection, if a company commissions the design of a corporate logo for promotional and advertising activities, the cost of developing the first rendering of the final design is not subject to the sales tax because the charge is for the services provided in producing and developing the design and the transfer of any tangible personal property is incidental to the performance of the service of developing the design. In this example, if the company requires 10 additional copies of the logo, the gross receipts from the sale of those copies are subject to the sales tax.

     5. The sales tax does not apply to any charges for 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.

     (Added to NAC by Tax Comm’n, eff. 11-12-93)