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Arizona Examines Out-of-State Printing.


Manufacturing

A recent opinion of the Arizona Court of Appeals affirmed the Tax Court’s decision that out-of-state printing services are not subject to use tax. A taxpayer in the business of publishing telephone directories contracted with out-of-state printers for printing services and supplied the printers with paper purchased from out-of-state milling companies. While Arizona’s transaction privilege tax is based on gross receipts and would include printing for an in-state printer, the state’s use tax provisions impose no specific tax on printing services. The decision in this case supports the conclusion that printing services are not subject to use tax by applying both the “dominant purpose” and “common understanding” tests. In this case, it is clear the printer is in the business of providing a service and the paper mill is in the business of selling taxable tangible personal property (Qwest Dex, Inc. v. Arizona Department of Revenue, Arizona Court of Appeals, No. 1 CA-TX 03-0017, April 5, 2005).

(01/10/2006)
(Archived)
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