Ruling 91-4

Sales Agent Services

This Ruling is cited in Ruling 93-3

FACTS:

Literary agents enter into a contractual relationship with their author/clients to represent them with publishers and the publishing industry for the purpose of assisting the author/client in the ultimate publishing of his literary work. Compensation to the literary agent is based upon different arrangements but generally can be broken down into (a) retainer arrangements which are not contingent upon future events and (b) commission arrangements which are contingent upon successful placement of the manuscript and ultimate publishing of the literary work. The services provided on behalf of the author/client are rendered both at the offices of the client, at the offices of the literary agent and at the offices of prospective publishers and printers, etc.

ISSUE:

Whether the services rendered by literary agents are subject to sales and use taxes under Section 12-407(2)(i)(U) of the General Statutes as "services of the agent of any person in relation to the sale of any such item of tangible personal property for such person."

RULING:

The manuscript represents the intellectual product of the author and is an expansion of the author's thoughts. In representing the author, the literary agent hopes to induce a publisher, in a collaborative effort, to turn the ideas and concepts contained in the manuscript into a marketable book. Because such manuscripts are not considered to be tangible personal property, as that term is defined in Section 12-407(13), the services rendered by literary agents are not subject to sales and use taxes under Section 12-407(2)(i)(U).

LEGAL DIVISION

February 5, 1991