Tax Type
Retail Sales and Use Tax
Description
Publishing and Broadcasting; Financial Magazines
Topic
Taxability of Persons and Transactions
Date Issued
05-29-1992
May 29, 1992
Dear***************:
This will respond to your letter of January 8, 1992 in which you seek correction of a recent sales and use tax assessment to * * * (the "Taxpayers').
FACTS
The Taxpayers contest the assessments claiming that the following types of items which were held taxable should not have been: numerous publications, charges by rating services which provide rating information via diskette or microfiche, and freight and handling charges.
DETERMINATION
I will address each of these issues individually below..
Publications -Va. Code § 58.1-608(A)(6)(c) provides an exemption from the sales and use tax for:
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- [a]ny publication issued daily, or regularly at average intervals not exceeding three months, and advertising supplements and any other printed matter ultimately distributed with or as a part of such publications, except that newsstand sales of the same are taxable.
- [a]ny publication issued daily, or regularly at average intervals not exceeding three months, and advertising supplements and any other printed matter ultimately distributed with or as a part of such publications, except that newsstand sales of the same are taxable.
A review of the various "periodicals' provided, including Employee Benefit Plan, Best's Review, Crittenden Insurance Markets, The CSR Advisor, The John Liner Letter, Independent Agent, The Automated Agency Report, The Hales Report, Rough Notes and the Real Estate Finance Journal, reveals that they all qualify as exempt "publications.' In addition, based upon information supplied by the Taxpayer and the publishers of the various other publications held taxable in the audit, I find that, except as noted otherwise below, all qualify as exempt publications.
It is my understanding that the Insurnet National Users Group and the International Society Certified Employee Benefits are available only to a restricted audience and thus are taxable. In addition, while Best's Review is an exempt publication, Best's Key Rating Guide is taxable. Thus, the portion of items 112 and 114 representing the purchase of Best's Key Rating Guide will remain taxable. In addition, Item 259-Film-Cafeteria Comp Plans/Equinomics Newsletter, Item 949-1991 Underwriting Guide Supplement Serv, Shp/hdlg, the Equitable Real Estate Investment, Money Market Insight, and the International Risk Management Institute will remain taxable unless the Taxpayer can provide evidence indicating that such items should be exempt.
Please note that purchases of back copies of taxable or exempt publications are taxable.
Information updates via diskette, etc.-The department has previously ruled in P.D. 88-20 (1/4/88), copy enclosed, that the true object of transactions involving the sale of price updates via diskette or other tangible personal property is taxable because a ``sale' of ``tangible personal property' occurs within the meaning of Va. Code § 58.1-602. A distinction can be made, however, between instances in which the information contained on the diskette is tailored to the specific needs of a taxpayer (customized) or standard. If it is customized, the charge for such is exempt from the tax as the true object sought by the Taxpayers is the services of the information provider. However, if the update is standard, the charges for such is taxable as no special services of the information provider are involved. (See P.D. 91-161 (8/12/91), also enclosed)
In the instant case, it appears that the information obtained by the Taxpayers via diskette or other tangible personal property is standardized and thus was correctly held taxable by the auditor. However, if the Taxpayer can provide documentation indicating that such information was customized, I may be willing to revise the assessment accordingly.
Transportation and handling charges-VR 630-10-107 provides that the tax does not apply to transportation or delivery charges added to a taxable sale provided such transportation charges are separately stated on the invoice to the customer. However, if the transportation charges are not separately stated or are combined with handling charges they become taxable. In the instant case, combined shipping and handling charges were not held taxable by certain vendor.
While I cannot accept the Taxpayer's offer to pay the tax on 25% of the total shipping and handling charges held taxable in the audit, since this is the first audit of the Taxpayer, I do find basis for accepting 50% of the tax as a reasonable compromise. The assessment will be revised to remove 50% of the tax assessed on combined shipping and handling charges. However, if the Taxpayer can provide information documenting the actual shipping charges, I will agree to remove all such charges from the assessment.
Accordingly, the assessment will be revised as indicated above and may be revised further if the Taxpayers can provide the documentation requested herein. Such information should be sent within 30 days of the date of this letter to the department's Office Services Division, Technical Services Section, P.O. Box 6-L, Richmond, Virginia 23282. If such information is not received within the allotted time period, the assessment, revised as provided herein, shall be due and payable immediately.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner