Laws, Regulations and Annotations


Business Taxes Law Guide—Revision 2024

Sales and Use Tax Memorandum Opinions

Photo Screen Service Co.

Exposed and developed photosensitive, gelatin-coated film, used in silk-screen stencil operations, is not a reproduction proof. The gelatin portion in the form of the desired design is a component part of the stencil used to print signs or posters.

Note: This case preceded the statutory exemption for reproduction proofs and for the most part the taxation of leases. It deals with an outdated version of Ruling 24 (now Regulation 1541). While the findings with respect to the gelatin coated film are still valid, the balance of the opinion regarding reproduction proof has been altered by subsequent statutory and regulatory changes.


In the Matter of the Petition of PHOTO SCREEN SERVICE CO. for Redetermination of Sales Tax.


For Petitioner:

John A. Pettis, Jr.
Attorney at Law

For Staff:

Robert H. Anderson
Tax Counsel


This petition is made pursuant to section 6561 of the Sales and Use Tax Law by Photo Screen Service Co. against a deficiency determination of sales tax in the amount of $5,623.36 for the period of October 1, 1962, to September 30, 1965.

The issue presented by this petition is whether gelatin coated film ready to be transferred to fine mesh silk constitutes a reproduction proof within the meaning of the term under ruling 24 relating to printing and related industries and as defined in Business Taxes General Bulletin 62-3, which contains an interpretation of reproduction proof as the term is used in ruling 24.

Silk screen printing is a stencil process that forces ink through open meshes of a silk screen on which the desired pattern or design has been imposed, with those parts not to be printed stopped by an impermeable coating.

The manufacture of a silk screen, ready for printing, includes several steps. A layout is first drawn on paper. A transparency is made of the layout and it is photographed. The resulting negative is then exposed to a photo-sensitive gelatin coated plastic sheet. After the developing process the gelatin coating on the plastic sheet appears as the exact design on the negative. The gelatin design is then transferred to a fine mesh sheet of silk. In other words, the gelatin design is transferred from the plastic sheet to the fine mesh silk, thereby creating a stencil. The silk screen stencil is then tightly stretched over a wooden frame and is ready for use in printing.

The petitioner sells to a related firm known as Anderson Silk Screen Printing Company, Inc., the gelatin coated plastic sheet containing the desired design to be transferred to the fine mesh silk screen. The Anderson firm transfers the gelatin design to the silk and thereafter completes the manufacturing process. Sales to the Anderson firm were considered by the petitioner to be non-taxable transactions and no sales tax reimbursement was added to the sales price and no tax was reported and paid to the state.

Petitioner contends that the gelatin coated plastic sheet containing the design to be transferred to the silk screen is a reproduction proof under ruling 24 and as defined in bulletin 62-3.

Ruling 24 provides in part:

The furnishing of reproduction or galley proofs for no additional charge does not render taxable the charge for typography or type composition. When, however, reproduction proofs are physically incorporated into a paste-up, "mechanical", or assembly, the cost of the reproduction proof including the cost of typography may not be deducted from the charge for the paste-up, "mechanical", or assembly in calculating the base on which the tax is computed.

Bulletin 62-3 defines reproduction proof to be:

A "reproduction proof" is a direct proof, copy, likeness or photographic image of type set by any typesetting process and used exclusively for reproduction purposes. Tax does not apply for typesetting by any process notwithstanding the fact that a reproduction proof as defined herein, is delivered to a customer for no additional charge.

Proof is defined in the Reader's Digest Great Encyclopedic Dictionary to mean, in the printing trade, a printed trial sheet showing the contents or condition of matter in type or of a plate or the like, with or without marked corrections. In engraving or etching a proof is a trial. In photography a proof is a trial.

The petitioner contends that the plastic sheet, gelatin-coated, in the form of the image or design to be transferred to the silk screen, is a reproduction proof pursuant to bulletin 62-3 because it is a likeness of type set by a typesetting process and is used exclusively for reproduction purposes. The petitioner implicitly assumes that the sale of a reproduction proof is not taxable. We need not discuss that point, however, since we do not believe that the item in question is a reproduction proof.

The petitioner has misconstrued the language of bulletin 62-3. The words "used exclusively for reproduction purposes" in bulletin 62-3 refer to the composed type and not the proof or trial sheet printed from that type. The fact that the item sold by petitioner is used for reproduction purposes is immaterial.

It is concluded, therefore, that the exposed and developed photosensitive, gelatin-coated film sold to the petitioner's related firm is not a reproduction proof. Rather, the gelatin portion in the form of the desired design is a component part of the silk screen stencil used to print signs or posters.

In this matter the Anderson Silk Screen Printing Company, Inc. is the printer, and under ruling 24 is the consumer of "any properties purchased for use in the preparation of printed matter to be sold, provided title to such materials is retained by the printer." The Anderson firm retains title to the silk screen, including the gelatin-coated film it purchased from the petitioner. The sale of the gelatin-coated film to Anderson was, therefore, a retail sale of tangible personal property and was subject to tax.

For the reasons expressed in this opinion the Board has determined the tax as recommended by the staff, rejecting the petitioner's contention that the gelatin coated film is a reproduction proof and that the retail sale of it to Anderson Silk Screen Printing Company is not subject to sales tax.

Done at Sacramento, California, this 3rd day of October, 1967.

Paul R. Leake, Chairman

John W. Lynch, Member

George R. Reilly, Member

Richard Nevins, Member

Attested by: H. F. Freeman, Executive Secretary