Tax Type
Retail Sales and Use Tax
Description
Supplies purchased by advertising business
Topic
Taxability of Persons and Transactions
Date Issued
02-27-1987
February 27, 1987
Re: Ruling Request/ Sales and Use Tax
Dear *********************
This will reply to your letter of July 29, 1986 seeking information on the correct application of the sales and use tax to transactions between advertising businesses and their clients.
FACTS
Specifically, you ask whether all purchases by an advertising business of supplies invoiced after July 1, 1986, would be transactions on which suppliers should collect and report the tax, regardless of the actual date of transfer of the invoiced materials. Similarly, it is asked whether charges by an advertising business to its clients, invoiced after July 1, 1986 qualify for exemption from the tax, notwithstanding the timing of the services rendered.
RULING
Effective July 1, 1986 the tax does not apply to "advertising" which is defined in §58.1-602(23) of the Virginia Code as, "the planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting or 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."
As a result of this law change, the Department has recently revised §630-10-3 of the Retail Sales and Use Tax Regulations, a copy of which is enclosed.
Based on the foregoing, the tax applies to all supplies purchased for use or consumption by an advertising business in the development of a media ad campaign, invoiced on or after July 1, 1986, regardless of the date on which such supplies were actually received by the advertising business. However, purchases by an advertising business on or after such date of concept, writing, graphic design, mechanical art, photography and production supervision which is to become a component part of media advertising will qualify for exemption from the tax.
In addition, the tax does not apply to charges by an advertising business in the production of media advertising invoiced to its clients on or after July 1, 1986.
I hope the foregoing has responded to your questions but please let me know if You have any further questions.
Sincerely.
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner