Revenue Administrative Bulletin 1989-65

SALES AND USE TAX EXEMPTION FOR COMMERCIAL RADIO AND TELEVISION BROADCASTERS

Approved: October 5, 1989

RAB-89-65 The purpose of this Bulletin is to clarify the sales and use tax exemption available to commercial radio and television broadcasters. [MCL 205.54a(i) and 205.94(o)]

In December 1988, P.A. 519 and P.A. 459 were passed amending the Sales and Use Tax Acts, respectively. Under the new laws.

1. A specific exemption is given for certain tangible personal property purchased by persons licensed to operate commercial radio and television stations. The exemption is available when the property is used in the origination or integration of the various sources of program material for commercial radio or television transmission.
2. The exemption specifically excludes a vehicle licensed and titled for use on public highways and property used in transmitting to, or receiving from, an artificial satellite.

Listed below and on the following pages are examples illustrating the tax treatment of various items associated with the broadcast industry.

Typical Tax Exempt Items

Tapes, recordings and film

Tape editing equipment

Film processing, editing and preview equipment

Film cameras and projectors

T.V. cameras and associated equipment

Microphones

Turntable and playback equipment

Broadcast tape recorder systems, compact discs, audio cartridge decks, R-dat

Audio tape recorders, edit controllers, mixers

Routing/switching equipment

Master digital clock

Automated logging (traffic/scheduling) system

Audio and video cartridge machines

Monitor and switching equipment

Computer and weather graphic equipment

Studio consoles and production interconnecting amplifiers

Teleprompters, teletypewriters, wire service

Character generators, animation devises and frame synchronizers

Image storage equipment (still store) and associated disc drives

Digital audio and video effect equipment (paint box)

Optical laser (video) equipment

Remote broadcast equipment

Audio News Gathering equipment

Electronic news gathering and electronic film production equipment

Processing amplifiers

EQ amplifiers

Telephone lines/service between remote broadcast and permanent studio

Typical Taxable Items

Main and auxiliary transmitters

Transmitter cooling system, control console, and power switching equipment

Transmitter automation and emergency equipment

Transmitter remote control equipment

Antennas and supporting towers

Antenna deicing systems

Satellite receiving and sending equipment

Radio ground systems

Tower elevators and lighting equipment

Tower guy line snubbing systems

Tower strobe light systems

Transmission lines and line pressurizing equipment

Field test measuring equipment

Modulation, frequency, and phase monitors

Radio limiting amplifiers

Bridging and distribution amplifiers

Phase correcting equipment (monochrome and color)

Visual and aural monitoring equipment

Multi-channel sound systems (stereo generators and monitoring equipment-transmission area)

Production lighting systems

Production materials – props, script materials, sets

Studio lighting broads and fixtures

Racks and cabinets to house equipment

Two-way radio/paging systems

Mobile and cellular telephones

Telephone lines/service other than between remote broadcast and permanent studio

Intercom systems

Vehicles licensed and titled for use on public highways (production equipment contained in vehicle may be exempt)

Typical Multiple Use Items

The following items generally have multiple uses within the broadcast industry. Where the items can be used or consumed in an exempt use and one or more other uses, the tax will apply to the items unless it can be determined and substantiated that a percentage use of the item or other apportionment of use is equitable and practical.

1. Test equipment, maintenance equipment, replacement parts, and power requirements. These items are exempt if consumed in the studio production area and taxable when consumed in relation to the transmitter, tower, or satellite equipment.
2. Microwave and related equipment. The communication link between the studio and the transmitter is taxable. However, between the studio and an off-site source gathering point the link is exempt.
3. Audio/video processing equipment. Consumption in the transmitting area is taxable while pre-transmission use is exempt.
4. Audio limiting and bridging/distribution amplifiers. Exempt if used to integrate sources of program material.

Any questions regarding the amendments to the commercial radio and television exemption section of the Sales and Use Tax acts may be directed to:

Michigan Department of Treasury

Sales, Use, and Withholding Tax Division

Treasury Building

Lansing, Michigan 48922