Ruling 89-271

Engineering

Your client renders pre-construction surveys whereby he is hired by builders, contractors or city or state agencies to take pictures and record vocal descriptions on tapes of the condition of buildings prior to construction blasting. Your client stores the negatives and tapes in his office and retrieves said negatives and tapes at the customers' requests. At this time, your client develops the negatives as well as transcribes the tapes and furnishes the photographs and transcriptions to his customers.

The preconstruction surveys rendered by your client would not be taxable to the extent that the agreements are for performing a service whereby the negatives and descriptions recorded on tape are a part of your client's work product and remain the property of your client while being stored. However, if your agreements are of a nature whereby your client is hired to take photographs and record descriptions on tape that become the property of your client's customers while in storage, then the total gross receipts for the preconstruction surveys are subject to the sales and use tax. In the latter case, the essence of the transaction is for the sale of property (i.e., photographs and tapes) where the service portion of the transaction is embodied in the transfer of property.

LEGAL DIVISION

December 12, 1989