Tax Type
Retail Sales and Use Tax
Description
Newspaper advertising supplements
Topic
Taxability of Persons and Transactions
Date Issued
09-16-1988
September 16, 1988
Re: Request for Ruling: Sales and Use Tax
Dear ********************
This will refer to your letter of August 3, 1988 to********** of the department's Technical Services Section. *********** of the Department of Economic Development has asked the department to again review your letter and respond to the questions posed.
FACTS
I understand that your corporation is engaged in the printing and sale of newspaper advertising supplements. Based upon the information provided by yourself and the *********** president of your corporation, in a September 9, 1988 telephone conversation with********** of the department's Tax Policy Division, I further understand that your corporation does not provide design, creative concept, copyrighting, or other artistic or creative services to customers in connection with its sales of advertising supplements. Rather, customers typically furnish a finished copy to your corporation in plate ready format. From this copy, your corporation creates a plate that is used in the printing process.
RULING
"Advertising" is defined in § 58.1-602.23 of the Code of Virginia as:
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- the planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting and other media, including, without limitation, the providing of concept, writing, graphic design, mechanical art, photography, and production supervision.
- the planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting and other media, including, without limitation, the providing of concept, writing, graphic design, mechanical art, photography, and production supervision.
Your corporation will be deemed to be an advertising business, however, if in the future it contracts with customers to both create (provide concept, design, copyrighting services, etc.) and print advertising supplements.
Assuming the facts presented in your September 9, 1988 telephone conversation are correct, following are the answers to the questions posed in your August 3, 1988 letter:
1. The combined state and local sales and use tax rate is 4½% (3½% state and 1% local).
2. As a printer of tangible personal property for sale or resale, your corporation will enjoy an exemption from the tax as an industrial manufacturer. The exemption will apply to raw materials, including paper and ink, used or consumed directly in the printing process (see enclosed Virginia Regulations 630-10-63 and 630-10-86).
3. The industrial exemption will also apply to printing presses and other equipment used directly in the printing process (see VR 630-10-63).
4. To the extent distributed with or as part of a publication issued daily or at average intervals not exceeding three months, the sale of newspaper advertising supplements is not subject to the tax. For purposes of this exemption, it does not matter whether the advertising supplements will be distributed in Virginia or out-of-state publications (see enclosed Virginia Regulation 630-10-73).
5. To the extent distributed outside of Virginia after storage in the state for twelve months or less, catalogs and other similar printed materials used to advertise tangible personal property for sale or resale are not subject to the tax. For the period from July 1, 1986 to June 30, 1989, this exemption has been expanded to include all catalogs, brochures, direct mail letters, corporate reports, etc. (whether or not used for advertising purposes), which are distributed outside of Virginia after storage in the state for twelve months or less (see enclosed Virginia Regulations 630-10-18.1 and 630-10-86).
6. Printed advertising materials which are printed in Virginia and mailed to Virginia addresses are subject to the sales tax.
7. Materials printed and placed into the U. S. Mail outside of Virginia are not subject to the sales and use tax when delivered to Virginia addresses. This is because the purchaser has neither taken delivery to or possession of the printed materials within Virginia. Materials printed outside of Virginia and delivered directly to the purchaser within Virginia are taxable, however.
8. Advertising supplements which will not be distributed with publications, for instance "store" copies, are subject to the sales tax when delivered to customers within Virginia.
I would like to reiterate that this ruling is based upon the facts presented in your September 9, 1988 telephone conversation. It is my understanding that you will furnish the department a letter in the coming week confirming the information presented in that conversation. Any change in the factual situation presented may affect the application of the tax to your corporation. I trust that this will fully answer your questions; however, please do not hesitate to contact the department if any further questions or concerns arise.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner