Tax Type
Retail Sales and Use Tax
Description
Advertisement and Promotional Materials;Packaging Materials
Topic
Exemptions
Date Issued
04-03-1985
April 3, 1985
Dear ****
This will reply to your letter of February 7, 1985 in which you submit a request for a ruling on the applicability of the sales and use tax to media advertising and price labels.
First, you wished to determine whether newspapers, radio or television advertising are taxable under the sales and use tax. The charges made by a newspaper for running an advertisement and the charges made by a broadcaster for airing an advertisement are not subject to the sales and use tax; however, fees paid for the production of an advertisement may be taxable depending on the circumstances involved.
Under present departmental regulations (Section 1-3 of the Virginia Retail Sales and Use Tax Regulations, [see } 64-009]), charges for preparing and placing advertising in the media are considered nontaxable. However, the sale of an advertisement to a customer who will place the advertisement in the media himself is subject to the tax. Of course, if advertising is developed "in-house' no sale takes place and no tax is due on the finished advertisement, only on the supplies and materials used to produce the advertisement.
It should be noted here that the department has released a proposed regulation, copy enclosed, that if adopted would extend the sales and use tax to charges made for the preparation and placement of advertising in the media. A decision has not been made as yet whether to adopt the proposed regulation; however, effective July 1, 1986, legislation recently enacted by the General Assembly would exempt all advertising developed for placement in the media from the sales and use tax.
As to your second question, the sales and use tax does not apply to stick-on price labels attached to products for sale. Such labels are a part of the product sold and their cost can be considered part of the product's selling price. Accordingly, such labels may be purchased exclusive of the sales and use tax under a resale exemption certificate.
Dear ****
This will reply to your letter of February 7, 1985 in which you submit a request for a ruling on the applicability of the sales and use tax to media advertising and price labels.
First, you wished to determine whether newspapers, radio or television advertising are taxable under the sales and use tax. The charges made by a newspaper for running an advertisement and the charges made by a broadcaster for airing an advertisement are not subject to the sales and use tax; however, fees paid for the production of an advertisement may be taxable depending on the circumstances involved.
Under present departmental regulations (Section 1-3 of the Virginia Retail Sales and Use Tax Regulations, [see } 64-009]), charges for preparing and placing advertising in the media are considered nontaxable. However, the sale of an advertisement to a customer who will place the advertisement in the media himself is subject to the tax. Of course, if advertising is developed "in-house' no sale takes place and no tax is due on the finished advertisement, only on the supplies and materials used to produce the advertisement.
It should be noted here that the department has released a proposed regulation, copy enclosed, that if adopted would extend the sales and use tax to charges made for the preparation and placement of advertising in the media. A decision has not been made as yet whether to adopt the proposed regulation; however, effective July 1, 1986, legislation recently enacted by the General Assembly would exempt all advertising developed for placement in the media from the sales and use tax.
As to your second question, the sales and use tax does not apply to stick-on price labels attached to products for sale. Such labels are a part of the product sold and their cost can be considered part of the product's selling price. Accordingly, such labels may be purchased exclusive of the sales and use tax under a resale exemption certificate.
Rulings of the Tax Commissioner