Sales Tax on Advertising Services

Welcome to the latest installment of our blog “What are the rules for NYS Sales tax for my profession?”  In this blog we are highlighting another industry with a few of the broad guidelines to follow!  Our hope is to not only provide helpful information for the business owners, but the consumers as well!

This blog’s industry is Advertising Services.

An advertising service is a service that consists of the following:

•  Consultation and development of advertising campaigns; and
•  Placement of advertisements with the media

The sales of these services are not subject to sales tax.  In addition, materials created by an advertising agency that are conveyed to its customers digitally or in any other electronic format are also not subject to sales tax.

The area of advertising services that is subject to sales tax is as follows:

• If an advertising agency sells layouts or art work, for example, to the customer before showing them to the media, the advertising agency is making a sale that is subject to sales tax.  Any other outright sales of tangible personal property by an advertising agency are subject to sales tax.
• In addition, any purchases by an advertising agency for use to perform its services are purchases at retail that are subject to sales tax.

There are sales tax exemptions that may apply to the purchases made by advertising agencies.  The following purchases that if made by an advertising agency are exempt from sales tax:

• ·         Producing television and radio commercials and advertisements; or
• ·         Developing and producing printed promotional materials

This is just a brief overview of the sales tax laws regarding the sale of advertising services.  Feel free to give our office a call for more information.

By Renee Greenspan