April 26, 2001
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear ****:
This will reply to your letter in which you seek correction of the retail sales and use tax audit assessment issued to **** (the "Taxpayer") for the period of July 1996 through May 1999. I apologize for the delay in responding to your appeal.
FACTS
The Taxpayer is a manufacturer of furniture. When the Taxpayer ships furniture to the final consumer, they enclose a Customer Data Card with the product. This card is to be filled out by the customer and provides the Taxpayer with marketing information and the demographics of persons purchasing their furniture. As an incentive, all customers who fill out a Customer Data Card are eligible for a drawing for $1,500 worth of furniture to be given away by the Taxpayer. The Taxpayer believes the Customer Data Cards are promotional items exempt from the sales and use tax in accordance with Title 23 of the Virginia Administrative Code (VAC) 10-210-3010 (formerly Virginia Regulation 630-10-86), copy enclosed.
DETERMINATION
Code of Virginia § 58.1-609.6(4) provides an exemption from the retail sales and use tax for "[c]atalogs, letters, brochures, reports, and similar printed materials, except administrative supplies, ... when stored for twelve months or less in the Commonwealth and distributed for use without the Commonwealth." (Emphasis added). This statute defines "administrative supplies" to include, but not limited to, "letterhead, envelopes, and other stationery; and invoices, billing forms, payroll forms, price lists, time cards, computer cards, and similar supplies." Title 23 VAC 10-210-3010.A expands on the definition of administrative supplies to include "supplies for internal use by the purchaser."
A review of the list of printed items in VAC 10-210-3010.H that qualify for the exemption under Code of Virginia § 58.1-609.6(4), reveals that all items included in the list are basically informational items for the benefit of the recipient. The Customer Data Cards in question are a marketing tool solely for use by the Taxpayer in an administrative function, i.e., targeting its furniture market. For this reason, I cannot agree that the Customer Data Cards fall within the statutory exemption afforded under Code of Virginia § 58.1-609.6(2). This determination is supported by Public Document 92-56 (4/29/92)
, copy enclosed.
Accordingly, I find that the assessment is correct. The Taxpayer should remit a check in the amount of ***within 30 days of the date of this letter to cover the contested portion of the audit. Payment may be sent to *****, Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880. If you should have any questions regarding this letter, please contact *** at ***.
Sincerely,
Danny M. Payne
Tax Commissioner