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Tax Law

Digital art subject to sales tax in Texas

The Texas Comptroller adopted an Administrative Law Judge’s decision affirming a sales and use tax assessment on a Texas-based marketing and advertising agency for “invoices for the time to create digital artwork.” According to the Comptroller, the artwork that the advertising agency “delivered to the third‑party printers was either finished art or preliminary art that became physically incorporated into finished art for advertising.” Therefore, the sales were taxable sales of tangible personal property, instead of nontaxable preliminary art.  Additionally, the Comptroller concluded that it was irrelevant whether the agency was involved in printing the artwork; the sales tax is due on creating the tangible personal property in Texas, not on printing the artwork in Texas.