Document Number
91-155
Tax Type
Retail Sales and Use Tax
Description
Advertising; Circulars, supplements, and inserts
Topic
Taxability of Persons and Transactions
Date Issued
08-02-1991
August 2, 1991



Re: Request for Ruling: Sales and Use Tax


Dear*****************

This will reply to your letter in which you seek a ruling on the applicability of the Virginia retail sales and use tax on various hypothetical situations involving the sale and/or purchase of advertising shoppers, circular, supplements and inserts.

I will answer the request for rulings on the various hypotheticals below based on the relevant Va. Code sections and regulations.
RULING
Generally

Virginia Regulation (VR) 630-10-3 provides that the retail sale and use tax does not apply to charges by an advertising business for professional services in the planning, creating or placing of advertising in newspapers, magazines, billboards, direct mail, radio, television, or other media regardless of how such charges are computed by the advertising business and whether or not such business actually places the advertising in the media. Further, the regulation states that advertising businesses engaged in the professional services are the taxable users and consumers of all tangible personal property purchased for use in such businesses, and provides examples of the tangible personal property, including but not limited to, printing, including direct mail items, non-customized or stock mailing lists, administrative items and promotional items (copy enclosed).

As noted in P.D. 88-63 (4/6/88), copy enclosed, an advertising business is subject to the tax on all printing purchased in connection with a media advertising campaign, including printing that might otherwise qualify for exemption under another provision of law, a.g. Va. Code §§ 58-608 (A) (6) (g) -newspaper advertising inserts and 58.1-608(A)(6)(d)-printed materials for distribution outside Virginia.

However, mailing services provided separate from the printing of materials are not subject to the tax when purchased by the advertising business as part of a media advertising campaign.

Definitions

For purposes of this ruling, the following definitions apply:
    • "Advertiser" means the consumer contracting with the advertising agency for professional services relating to advertising as defined in Virginia Regulation (VR) 630-10-3.
    • "Seller" means the person or group of persons providing advertising as defined in VR 630-10-3.

Advertising Supplement/Advertising Inserts

Printed advertising material mailed by or on behalf of the advertiser to a publisher to be inserted into and be distributed as an integral part of a newspaper.

a) Seller contracts with a printer to print the supplement/insert.
    • Tax Consequences
      • Printer bills Seller for printing charge and includes tax on invoice to Seller. Printer collects and remits the tax.
      • Seller adds the total printing charge (actual printing charge and tax) into the total charge to the Advertiser. No tax is charged on the total amount billed to the Advertiser by the Seller.

b) Printer sends the printed supplement/insert directly to the publisher of newspaper to be inserted into exempt publication.
    • Tax Consequences
      • Printer bills Seller for printing charge and includes tax on invoice to Seller. Printer collects and remits the tax.
      • Newspaper publisher bills Seller for advertising space. No tax is added pursuant to VR 630-10-3.
      • Seller adds publisher's advertising space charge to the total charge to the Advertiser. No tax is charged on the total amount billed to the Advertiser by the Seller.
    • c) Printer sends the printed supplements/inserts to mailing house for purpose of mass mailing to various newspapers for insertion into exempt publications.
    • Tax Consequences
      • Printer bills Seller for printing charge and includes tax on invoice to Seller. Printer collects and remits the tax.
      • Mailing house bills Seller for the charge of mailing only. No tax is included in the invoice to the Seller.
      • Seller adds the total printing charge (actual printing charge and tax) into the total charge to the Advertiser. No tax is charged on the total amount billed to the Advertiser.

Advertising Shopper

Printed advertising material that is made available upon entering the location of the advertiser.
    • a) Seller contracts with a printer to print the advertising shopper.
    • Tax Consequences
      • Printer bills Seller for printing charge and includes tax on invoice to the Seller. Printer collects and remits the tax.
      • Seller adds the total printing charge (actual printing charge and tax) into the total charge to the Advertiser. No tax is charged on the total amount billed to the Advertiser by the Seller.

b) Printer sends the advertising shopper directly to a mailing house for purposes of direct mailing to the advertiser to be made available at the location(s) of the advertiser.
    • Tax Consequences
      • Mailing house bills Seller for the charge of mailing only. No tax is included on the invoice to the Seller.
      • Seller adds the mailing house charge in computing the charge to the Advertiser. No tax is charged on the total amount billed to the Advertiser by the Seller.

Advertising Circulars

Printed materials mailed directly by or on behalf of the advertiser to potential customers.

a) Seller contracts with a printer to print the advertising circular.

Tax Consequences
      • Printer bills seller for printing charge and includes the tax on invoice.
      • Seller adds total printing charge in computing the total charge to the Advertiser. No tax is charged on the total amount billed to the Advertiser by the Seller.

b) Printer sends the advertising circular directly to a mailing house for direct mailing to potential customers.
    • Tax Consequences
      • Mailing house bills Seller for the charge of mailing only. No tax is included on the invoice to the Seller.
      • Seller adds the mailing House charge in computing the total charge to the Advertiser. No tax is charged on the total amount billed to the Advertiser by the Seller.

I have enclosed some relevant rulings by the department regarding advertising and printed materials.

Please be advised that the position of the Department of Taxation on the above hypotheticals is based on the current statutes and regulations in force as of this date.

If you have any further questions please contact the Tax Policy Division

Sincerely,



W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46