Dollars and Sense: Take Advantage of the New Tax Exemption for Post-Production Equipment by Kenneth J. Ray, CPA Beginning January 1, 1999, the California Revenue and Taxation Code provides a partial exemption from sales and use taxes imposed on certain items used in teleproduction and post production, including nonlinear editing systems and digital audio workstations. This exemption, currently 5%, applies to the state portion of the sales and use tax rate. According to the code, purchases and leases that qualify include tangible personal property purchased for use by a qualified person to be used primarily in teleproduction or post production. In other words, if you're a full-time sound editor and you buy a new DAW, you probably qualify. Also qualifying are purchases to be used primarily to maintain, repair, measure or test post-production equipment. How do you claim the exemption? If you purchase or lease gear from a California-based supplier, you will need to provide them with a Section 6378 exemption certificate. If you're in Los Angeles County, instead of the standard 8.25% sales tax you would then pay only 3.25%. If the purchase is from an out-of-state seller, you will need to complete a Section 6378 use tax declaration form. Again, your use tax would be only 3.25%. For example, let's assume you are a video editor in Hollywood and you purchase a new nonlinear edit system for professional use from a local reseller. If the equipment costs $100,000, without the exemption you would pay sales tax to the seller of $8,250. By issuing a bona-fide Section 6378 exemption certificate to the reseller, your sales tax is only $3,250, for a savings of $5,000. Be aware that if you remove the equipment from California within one year from the date of purchase or lease, you will then become responsible for the previously exempted 5% sales or use tax. Consult your tax advisor if you have any additional questions.   Ken Ray is a partner at Kirsch, Kohn & Bridge LLP in Encino, California. He can be reached via e-mail   Reprinted from The Motion Picture Editors Guild Newsletter Vol. 20, No. 2 - March/April 1999   Guild Home | Newsletter Home | Top of Page   Copyright © 1999, All Rights Reserved by The Motion Picture Editors Guild, IATSE Local 700