City and County of Denver, Colorado

TAX GUIDE

Topic No. 63

PRINTING INDUSTRY

Printers are primarily engaged in the business of selling tangible personal property in the form of printed matter. The full purchase price of the print job is subject to sales tax. The purchase price includes the gross value of all materials, labor or service, overhead, and profit included in the final charge to the consumer. A job that is solely labor (e.g., layout) would not be taxable.

There are two definitions which affect the taxability of purchasing items, materials and supplies by a printer. The first is the general wholesale sale definition. For purchases to be exempt the purchaser must be engaged in the business of manufacturing and all of the following requirements must be met: #1 the material is actually and factually transformed by the process of manufacture; #2 it becomes by the manufacturing or compounding process a necessary and recognizable ingredient, component and constituent part of the finished product; and #3 its physical presence in the finished product is essential to the use thereof in the hands of the ultimate consumer. In addition to the wholesale sale provision there is a specific exemption for printers purchasing prepress preparation materials. The purchases of these items by printers are exempt provided the items or supplies are used in the preparation of customer specific layouts, which are eventually sold to a customer, either in their original purchased form or in an altered form and a sales or use tax is demonstrably collected from the printer’s customer unless the customer’s purchase is otherwise exempt from taxation.

Materials sold to a printer which are used by the printer for the printer's own purposes, and are not sold, are subject to taxation.

The following items are examples of prepress preparation materials that may be exempt from taxation when the requirements for exemption are met:

PREPRESS PREPARATION MATERIALS

AIRBRUSH COLOR PHOTOS

AUTOMASK

COLOR KEYS

COLOR SEPARATIONS

DIES

DUOTONE

ENGRAVINGS

FILM

HALF TONES

KODAK CONTACT PAPER

LASERTONES

LIGHT-SENSITIVE PAPER

MASKING MATERIALS

MYLAR

NEGATIVES

PLATES

PROOFING MATERIALS

PROOF SHEETS

RUBYLITH

SCREENS

SLIDES

TAPE (if resold)

TRANSPARENCIES

VELOXES

ALCOHOL REPLACEMENT

BLANKET CONDITIONER

BLANKET SAVER

BLANKET WASH

BLANKETS

BLENDER SOLUTION

DISKS AND DAT TAPES

FILM / PLATE DEVELOPER

FILM DEVELOPING FINISHER

FIXER

FOUNTAIN SOLUTION

PRESS OIL

GREASE

ISOPROPYL ALCOHOL

KODAK CONTROL STRIPS

PAPER STOP

PLATE CLEANER

PLATE FINISHER

PLATE PRESERVER

PLATE SAVER

PRESS WAX

PACKING SHEETS

REPLENISHER

ROLLER WASH

SCRATCH REMOVER

TONER CARTRIDGES **

WATER DUCTOR

** TONER WHEN PURCHASED IN BULK FOR THE PRODUCTION OF HIGH SPEED COPIES FOR RESALE WOULD BE EXEMPT UNDER THE WHOLESALE EXEMPTION.

EXAMPLE

ABC Print Shop, a Denver printer, has a job to print 5,000 brochures for XYZ Bank, a bank in Denver. In order for ABC to complete the job, it must purchase the following supply items from DEF Supply House: lasertones, transparencies, toner cartridges, alcohol replacement, and plate finisher. Since ABC is properly licensed to collect and remit Denver sales tax, its purchases from DEF of the lasertones and transparencies qualify for the prepress materials exemption. ABC's purchases of toner cartridges, alcohol replacement, and plate finisher are subject to taxation.

PREPRESS PREPARATION MATERIALS

Materials that are neither prepress items nor items that would be considered wholesale purchases

EXAMPLE