Tax Type
Retail Sales and Use Tax
Description
Printing shipped out-of-state
Topic
Appropriateness of Audit Methodology
Property Subject to Tax
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 June 28, 1991 in which you seek correction of a sales and use tax assessment for***************(the Taxpayer).
FACTS
The Taxpayer is a marketing, advertising, and public relations firm. The Taxpayer developed a brochure for a client and arranged to have the brochure printed in Virginia from the final product of their professional services. While brochures were shipped directly from the printer to the Taxpayer's out-of-state client, the Taxpayer was billed directly for the printing. The Taxpayer contests the assessment of tax on the cost of the printing of the brochures on the basis that the Taxpayer did not purchase the brochures for their own use but as agent for their client.
DETERMINATION
Va. Code §58.1-608(A)(6)(e) provides an exemption from the sales and use tax for "advertising" which is defined in §58.1-602 as the "planning, creating, or placing of advertising in newspapers, magazines...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." (Emphasis added) Virginia Regulation (VR) 630-10-3 provides in pertinent part that, "the tax applies to all purchases by an advertising business including, without limitation, the following items:...[p]rinting, including direct mail items, non-customized or stock mailing lists, handbills, brochures, flyers, bumper stickers, posters and similar printed materials...and whether or not any of such materials are intended for distribution out of the state."(Emphasis added)
It has been the department's consistent policy since the enactment of the advertising regulation in 1986 that advertising businesses make a taxable use of any printed materials which they purchase on behalf of clients, regardless of where the materials are stored or any exemption which may be enjoyed by their clients. The enclosed copy of P.D. 88-62 (4/6/88) provides a detailed explanation of this policy.
Therefore, I find no basis for correction of the current assessment. Accordingly, an updated bill, with interest accrued to date, will be mailed under separate cover. Should you desire a hearing in light of this determination, please contact the Tax Policy Division
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner