I recently received a piece of mail that made me laugh, then get angry, then consider moving my entire studio to a different planet. It was a letter from Blick Art Materials informing me that the Pennsylvania Department of Revenue has decided that the production of artwork (you know, the thing we do with our lives) does not qualify as “exempt manufacturing” under some dusty statute called 72 P.S. 7201 (c).
UPDATE: WE WON! Read About It Here: https://rafiandklee.com/victory-for-the-artists-but-the-war-isnt-over/
Basically, some pencil-pusher in a cubicle somewhere has decided that when we take raw materials and transform them into something entirely new, we aren’t actually making anything. We’re apparently just… having an expensive hobby? This may have just happened to us, but at this point I’m assuming we are not the only ones dealing with this.
How Does The Sales Tax Exemption Work (The Boring-but-Vital Part)
In case you’re unaware of how the grown-up business world is supposed to work: when you are a registered business that manufactures goods, you get a tax break. It’s called a Sales Tax Exemption.
Here’s the deal: If I buy a hunk of clay, paint, canvas, or a gallon of resin to make a sculpture that I then sell, I’m not supposed to pay sales tax on those materials. Why? Because the state gets its cut when the final customer buys the finished piece. If I pay tax on the materials, and the customer pays tax on the statue, the state is double-dipping.
To get this, you usually fill out a form (the REV-1220) and give it to your suppliers (like Blick). It’s a standard system designed to help small businesses actually, you know, stay in business.
Apparently, Art Supplies Are Not “Raw Material”
We’ve been in business for a while, and I’ve never run into this issue. According to Pennsylvania Department of Revenue, the state doesn’t think art is “manufacturing.” Apparently, they think we just wave a magic wand and the artwork appears. They don’t see the process of creation, or the physical labor of turning a blank canvas into a product. To them, we aren’t “producing goods.”
The core of the problem is that this statute is fundamentally outdated. The lingo used in the current law is written to benefit specific large-scale industries while leaving the door open for interpretations that exclude small businesses and independent makers.
This decision is, to use a technical term, dumb. It directly impacts how I order my materials and how much it costs to keep the lights on in my studio.
Standing Up to the Pencil-Pushers
I’m not taking this lying down. I am currently in the process of fighting this at the state level. As artists who run small businesses, we’re often treated like we’re playing pretend. We have to fight twice as hard just to get established systems to recognize our rights as legitimate businesses.
I’m now in communication with my local state representative to make them aware that the Department of Revenue is effectively penalizing the creative economy of Pennsylvania.
Here is my “Rogue Challenge” for you: Whether you use this tax exemption or not, this is about the principle. If the state decides our work isn’t “manufacturing,” they are deciding our work doesn’t have value.
- Check your orders. If you’re a registered business, see if you’re being charged tax on your raw supplies.
- Contact your State Rep. Seriously. Send a polite but firm email. Tell them that art is manufacturing, that we are businesses, and that this ruling is a blow to local makers.
We have a bit of a road ahead of us to get the “powers that be” to see us as the economic engine we actually are. Sometimes, the only way to get a seat at the table is to stand up and start making some noise.
If you live in PA, here is an example letter you can copy, paste and rewrite to suit you:
Subject: URGENT: PA Dept. of Revenue Ruling on Sales Tax Exemption for Artists (Statute 72 P.S. 7201 (c))
Dear Representative [Name],
I am writing to you as a constituent and a small business owner in our region to bring a concerning matter to your attention regarding a recent shift in the Pennsylvania Department of Revenue’s interpretation of tax law.
Recently, the Department has been contacting major art supply vendors (such as Blick Art Materials) to state that the production of artwork no longer qualifies as “exempt manufacturing” under Statute 72 P.S. 7201 (c).
The manufacturing exemption is a standard business practice designed to prevent “double-taxation” by allowing businesses to purchase raw materials—which are then transformed into a new, finished product—without paying sales tax at the point of purchase.
The core of the problem is that this statute is fundamentally outdated. The lingo used in the current law is written to benefit specific large-scale industries while leaving the door open for interpretations that exclude small businesses and independent makers. By ruling that artists are not “manufacturers,” the Department of Revenue is effectively:
- Invalidating our status as legitimate businesses: It suggests that the physical transformation of raw materials into a finished good only “counts” if it happens in a traditional factory setting.
- Creating a Double Standard: It allows large corporations to enjoy tax breaks on production while penalizing the small, local studios that make up the backbone of the creative economy in regions like ours in PA.
- Increasing Overhead Costs: This interpretation forces double-taxation on our materials, making it even harder for local makers to remain competitive.
The process of creating a sculpture, a piece of jewelry, or a painting is a physical transformation of raw materials into a manufactured good. I ask for your support in advocating for a modernized interpretation of this statute—one that recognizes the reality of 21st-century small business and ensures that “manufacturing” isn’t a term reserved only for big industry.
We are taxpayers, business owners, and vital contributors to the economic and cultural vitality of this district. I look forward to hearing your thoughts on how we can resolve this issue.
Sincerely,
[Your Name] [Your Business Name] [Your Address] [Your Phone Number]
