D.C. Mun. Regs. r. 9-431
Sales by vendors of direct mail advertising pieces, circulars, hand-outs, throw-aways, and similar advertising matter shall be subject to the sales tax on the sales price and reimbursement for sales tax shall be collected from the purchaser.
Advertising agencies shall not be retailers with respect to services of preparing and placing advertising in advertising media.
For the purposes of this section, the term "advertising media" includes, but is not limited to, newspapers, magazines, and other publications; radio and television programs; and billboards and other facilities used in public transportation.
An advertising agency is not a retailer of roughs, comprehensives, or visualizations prepared solely for the purpose of displaying the advertising idea to the agency's clients.
An advertising agency is a purchaser (as a principal) of tangible personal property incidental to the operation of its offices, such as stationery, ink, paint, tools, and office supplies. The tax shall apply to the gross receipts from the sale of these items to an agency.
An advertising agency shall report all purchases subject to the use tax if the sales tax has not been charged.
If an advertising agency (acting as agent for its clients) purchases tangible personal property, the tax applies to the gross receipts from the sale of the property to the agency. Examples include purchases of pamphlets, booklets, other printed matter; art work; radio transcriptions; engravings, and electrotypes and matrices.
Unless an advertising agency acts as a true agent, it is the retailer of the tangible personal property furnished to its clients, and the tax shall apply to the total amount received for the property.
In determining whether an advertising agency acts as a true agent of its clients, consideration shall be given to the contract between the parties, the conduct of the parties with respect to the property involved, and the facts and circumstances of the transaction.
Commercial artists or any other persons or firms engaged in the creation or production of drawings, paintings, designs, photographs, or other art work are retailers of such property sold to advertising agencies for use by the agencies in the rendition of their services, as well as similar property sold to advertisers or others.
The tax shall apply to gross receipts from the furnishing of drawings, paintings, designs, photographs, lettering, assemblies, or other art work used for reproduction as well as display purposes; but does not apply to receipts from services such as roughs or comprehensive visualizations, production supervision, consultations, or research.
D.C. Mun. Regs. r. 9-431