Tax Type
Retail Sales and Use Tax
Description
Advertising; Publishing and broadcasting; Restaurant guides
Topic
Taxability of Persons and Transactions
Date Issued
07-31-2000
July 31, 2000
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you request a ruling as to the application of the retail sales and use tax to the ****** distributed by ***** (the "Taxpayer"). I apologize for the delay in responding to your request.
FACTS
The Taxpayer publishes an annual or semi-annual restaurant guide in the area. The Taxpayer solicits advertising from local restaurants, produces a restaurant guide, and distributes the guide free of charge to residents located in the area. The Taxpayer may begin selling the restaurant guides in the future and distribute free issues to those restaurants which place ads in the guide. The Taxpayer is seeking a ruling on the retail sales and use tax application based on the facts presented.
DETERMINATION
Code of Virginia § 58.1-609.6(5) provides an exemption from the retail sales and use tax for "advertising," which is defined in Code of Virginia §58.1-602 as:
[t]he planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting and other media, including, without limitation, the providing of concept, writing, graphic design, mechanical art, photography and production supervision. Any person providing advertising as defined herein shall be deemed to be the user or consumer of all tangible personal property purchased for use in such advertising. (Emphasis added).
Title 23 of the Virginia Administrative Code (VAC) 10-210-40, copy enclosed, defines "advertising" as "the planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting or other media . . . ." The term "media," as used in this regulation, includes direct mail advertising. An "advertising business" is defined as "any person or group of persons providing >advertising= as defined herein." Title 23 VAC 10-210-41 (B) contains a list of purchases that are taxable to advertising businesses, including "[p]rinting, including direct mail items . . . whether or not for use in the development of a specific advertising campaign . . . ." (Emphasis added).
Based on the information provided to this office, the Taxpayer is acting as an advertising business with respect to the restaurant guides. Therefore, the Taxpayer is the user and consumer of all tangible personal property used in producing the guides, including the actual printing of the guides, and should pay the tax accordingly. Should the Taxpayer begin selling the restaurant guides, all of the guides may be purchased tax exempt and the Taxpayer should collect the tax on the retail selling price, and remit the use tax on all guides that are given away free of charge.
I would also note the publication exemption provided under Code of Virginia § 58.1-609.6(3) is not available in this case because the restaurant guide is published annually or semi-annually, not at average intervals not exceeding three months as required by the statute.
If you should have any questions, please contact *****, Office of Tax Policy, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20735K
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This will reply to your letter in which you request a ruling as to the application of the retail sales and use tax to the ****** distributed by ***** (the "Taxpayer"). I apologize for the delay in responding to your request.
FACTS
The Taxpayer publishes an annual or semi-annual restaurant guide in the area. The Taxpayer solicits advertising from local restaurants, produces a restaurant guide, and distributes the guide free of charge to residents located in the area. The Taxpayer may begin selling the restaurant guides in the future and distribute free issues to those restaurants which place ads in the guide. The Taxpayer is seeking a ruling on the retail sales and use tax application based on the facts presented.
DETERMINATION
Code of Virginia § 58.1-609.6(5) provides an exemption from the retail sales and use tax for "advertising," which is defined in Code of Virginia §58.1-602 as:
[t]he planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting and other media, including, without limitation, the providing of concept, writing, graphic design, mechanical art, photography and production supervision. Any person providing advertising as defined herein shall be deemed to be the user or consumer of all tangible personal property purchased for use in such advertising. (Emphasis added).
Title 23 of the Virginia Administrative Code (VAC) 10-210-40, copy enclosed, defines "advertising" as "the planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting or other media . . . ." The term "media," as used in this regulation, includes direct mail advertising. An "advertising business" is defined as "any person or group of persons providing >advertising= as defined herein." Title 23 VAC 10-210-41 (B) contains a list of purchases that are taxable to advertising businesses, including "[p]rinting, including direct mail items . . . whether or not for use in the development of a specific advertising campaign . . . ." (Emphasis added).
Based on the information provided to this office, the Taxpayer is acting as an advertising business with respect to the restaurant guides. Therefore, the Taxpayer is the user and consumer of all tangible personal property used in producing the guides, including the actual printing of the guides, and should pay the tax accordingly. Should the Taxpayer begin selling the restaurant guides, all of the guides may be purchased tax exempt and the Taxpayer should collect the tax on the retail selling price, and remit the use tax on all guides that are given away free of charge.
I would also note the publication exemption provided under Code of Virginia § 58.1-609.6(3) is not available in this case because the restaurant guide is published annually or semi-annually, not at average intervals not exceeding three months as required by the statute.
If you should have any questions, please contact *****, Office of Tax Policy, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/20735K
Rulings of the Tax Commissioner