Tax Type
Retail Sales and Use Tax
Description
Manufacturer's use of swatch cards
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
02-26-1986
February 26, 1986
Re: Request for Ruling/Sales and Use Tax
Dear ******************
This will reply to your letter of December 5, 1985, in which you request a ruling on the applicability of the sales and use tax to the fabric swatch program of ***************.
FACTS
************* (Taxpayer) is a manufacturer of upholstered furniture. In the marketing of its products, the taxpayer purchases swatch cards, which are used to show potential customers the various styles of upholstery fabric that they may choose from. Swatches, cut from the taxpayer's own fabric by the taxpayer's supplier, are placed on printed cards that bear the taxpayer's name, the name of the fabric pattern, and other information relating to the fabric pattern. The taxpayer requests a ruling on the applicability of the tax to such swatch cards.
RULING
Sections 58.1-603 and 58.1-604 of the Code of Virginia impose the sales and use tax with respect to the sale or use of tangible personal property in Virginia. An exception to this general rule is set forth in Virginia Code Section 58.1-608.30, which exempts the following items from the sales and use tax:
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- Catalogs and other printed materials used in the advertising of tangible personal property for sale, the envelopes, containers and labels used for packaging and mailing same, and paper furnished to a printer for fabrication into catalogs and other printed materials used in advertising tangible personal property for sale, when stored for twelve months or less in the Commonwealth and distributed for use without the Commonwealth.
To qualify for the above exemption, tangible personal property must meet several tests, but foremost, it must constitute printed matter. In this case, the taxpayer has its supplier fabricate woven upholstery fabric into swatch cards. Although the swatches cut by the supplier are placed on printed cards, the charges from the taxpayer's supplier primarily represent charges for the fabrication of woven fabric rather than the production of printed materials. Accordingly, the swatch cards purchased by the taxpayer are not exempt as "printed materials used in the advertising of tangible personal property." Therefore, the taxpayer should remit the tax on any swatch cards delivered to it in Virginia.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner