In Texas: Sales and Use Tax Exemptions Available for Producers of Audio Master Tapes

[user 133392]

I recently had a customer based in Texas purchase a board from me who may have been unaware that there is a sales tax exemption available for audio production equipment and some consumables.

Many items purchased, used, rented or repaired during the studio master recording process are exempt from the 6.25 percent state sales and use tax, as well as local sales and use taxes. These exemptions are included in the Texas Tax Code Section 151.318, and the Comptroller of Public Accounts Administrative Rule 3.300.

A producer may claim 100 percent exemption from state and local sales and use taxes on qualifying machinery and equipment purchased, repaired, leased or rented and used directly in the production of audio recording masters. If the equipment is exempt, any parts, repair or maintenance labor is also exempt.

The exemption can also be used by live music venues who make master recordings for sale or distribution.

In the 1990s Texas interpreted the sales tax law to allow equipment used in audio production as being part of a manufacturing process. Many people are unaware of this and for large purchases could save quite a bit of money from 6.25% to 8.25% depending on locality. All that is required is to submit an Exemption Certificate to the seller.

The link to the Texas Music Office is here: Sales and Use Tax Exemptions Available for Producers of Audio Master Tapes

Other states may have similar interpretations so even if you're not in Texas it would be beneficial to find out if your state offers this.