Tax Type
Retail Sales and Use Tax
Description
Catalogs and other printed material; Distribution outside of Virginia
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
11-04-1987
November 4, 1987
Re: Ruling Request/ Sales and Use Tax
Dear ******************
This will reply to your letter of July 17, 1987 on behalf of ********** (taxpayer), seeking a ruling on the correct application of the sales and use tax to certain printed materials purchased by the taxpayer.
FACTS
According to your letter, in connection with the promotion of its products, the taxpayer purchases printing in the form of a complete product binder, brochures, and envelopes for mailing such materials. The taxpayer then mails these materials nationwide to individuals on its master customer list and to persons who request product information. It is your contention that 99% of the printing the taxpayer purchases qualifies for exemption from the tax since it is for storage in Virginia for twelve months or less, is for distribution outside of Virginia, and is used for advertising the sale of tangible personal property. Furthermore, you have determined that the remaining 1% of such printing purchases are for distribution in Virginia, and are therefore taxable.
Accordingly you request permission to allow the taxpayer to purchase 100% of its printing from suppliers pursuant to certificate of exemption (Form ST-10A), and then remit the use tax to the department on its sales and use tax return based on the 1% of such purchases intended for distribution to Virginia customers.
In addition, if this method of reporting the tax is approved you intend to request refunds for taxes previously erroneously paid on 99% of the taxpayer's printing purchases which were stored in Virginia for twelve months or less for shipment out-of-state.
RULING
Prior to July 1, 1986, §58.1-608(30) of the Virginia Code provided an exemption from the sales tax for:
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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."
- 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."
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- Catalogs, letters, brochures, reports, and similar printed materials, except administrative supplies, the envelopes, containers and labels used for packaging and mailing same, and paper furnished to a printer for fabrication into such printed materials, when stored for twelve months or less in the Commonwealth and distributed for use without the Commonwealth. As used in this subdivision, "administrative supplies" shall include. but not be limited to, letterhead, envelopes, and other stationery, invoices, billing forms, payroll forms price lists, time cards, computer cards, and similar supplies.
- Catalogs, letters, brochures, reports, and similar printed materials, except administrative supplies, the envelopes, containers and labels used for packaging and mailing same, and paper furnished to a printer for fabrication into such printed materials, when stored for twelve months or less in the Commonwealth and distributed for use without the Commonwealth. As used in this subdivision, "administrative supplies" shall include. but not be limited to, letterhead, envelopes, and other stationery, invoices, billing forms, payroll forms price lists, time cards, computer cards, and similar supplies.
Please also see enclosed copies of recently revised Virginia Regulations 630-10-18.1 and 630-10-86 based on the new printed materials exemption.
Therefore, assuming that the proposed percentage of printed materials purchased by the taxpayer for distribution to Virginia residents represents the actual amount of such purchases, I find basis for allowing the taxpayer to report the use tax based on this percentage amount. However, if this proposed percentage does not also take into consideration printing purchased by the taxpayer for its own use and consumption, or for storage in Virginia for a period of more than twelve months, it would not accurately reflect the taxpayer's use tax liability for such printed materials. It should be noted further that this ruling will not bind the department in any future audit of the taxpayer, if it is determined that the percentage calculation proposed by the taxpayer at this time, did not accurately reflect its actual purchases of printing for mailing to Virginia residents or for its own use or consumption in Virginia.
Subject to the conditions mentioned immediately above, the taxpayer may use this same method in requesting any refunds from its suppliers or from the department, of taxes previously erroneously paid, provided such requests are made within the three year period of limitations provided in §58.1-1823 of the Virginia Code.
I hope that the foregoing has responded to your questions but let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner