Tax Type
Retail Sales and Use Tax
Description
Newspapers and Magazines Distributed for Free
Topic
Taxability of Persons and Transactions
Date Issued
08-30-1991
August 30, 1991
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear*****************
This will reply to your letter of April 16, 1991 in which you seek correction of a sales and use tax assessment for**************(the Taxpayer).
FACTS
The Taxpayer operates a hotel. An audit for the period September 1987 through August 1990 produced an assessment for its failure to submit sales and use tax on purchases of publications and flowers. The Taxpayer purchased newspapers and magazines for free distribution to its guests. Additionally, the Taxpayer received flowers in exchange for a donation to the *************. The Taxpayer contests the inclusion of these purchases in the audit.
DETERMINATION
I will separately address the two issues raised by the Taxpayer:
Newspapers and Magazines. Va. Code §58.1-608(A)(6)(c) provides in pertinent part, an exemption for the sale of any publication issued daily or regularly at average intervals not exceeding three months. However, purchases of newspapers and magazines at a newsstand are taxable. In the present case, the Taxpayer purchased newspapers, published daily, under a direct subscription with the publisher for free distribution to its guests. The magazines were published monthly and purchased for a period of three months directly from the publisher and distributed free to the guests of the hotel. Thus, as they were not sold from a "newsstand," purchases of the newspapers and magazines by the Taxpayer are exempt from the tax.
Flowers. Va. Code §58.1-608(A)(8)(w) provides an exemption effective retroactive to January 1, 1984 through June 30, 1993 for tangible personal property used or consumed, distributed or sold by an organization exempt from taxation under §501(C)(3) of the Internal Revenue Code which is organized exclusively for the purpose of eliminating cancer as a major health problem by preventing cancer, saving lives from cancer, and diminishing suffering from cancer through research, education and service. In the present case, we are unable to determine whether the transaction represents a sale or donation of tangible personal property; however, due to the retroactive nature of the exemption, no tax is due on this transaction from the Taxpayer.
Accordingly, the outstanding balance of the audit attributable to the above mentioned items will be abated in accordance with the determination set forth in this letter and a revised Notice of Assessment will be issued to the Taxpayer under separate cover.
If you have any questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner