Graphic Design Services Non-Taxable Advertising Services in New York

Wednesday, January 22nd, 2014

New York

The New York Division of Tax Appeals recently released a decision that a taxpayer's graphic design services were non-taxable advertising services.

The taxpayer provided graphic design services for its customers, designing promotional materials. The taxpayer's customers were primarily public relations, advertising, and marketing firms.

New York taxes information services. These services include "furnishing of information by printed, mimeographed or multigraphed matter or by duplicating written or printed matter in any other manner." These taxable services do not include services provided by advertising agents or other persons acting in a representative capacity. Advertising services are therefore not subject to tax. Advertising services include consulting and developing advertising campaigns.

The taxpayer argued that it provided advertising services. The Department of Taxation and Finance argued that the taxpayer merely provided design services and did not provide advertising services.

The Division of Tax Appeals found that the taxpayer provided non-taxable advertising services. "Advertising," as commonly understood, includes the service of design. The taxpayer's intention when designing the promotional materials was to call particular products to the public's attention. It did not matter whether the taxpayer held itself out as an advertising firm. The taxpayer's services were therefore non-taxable advertising services.

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