Tax Type
Retail Sales and Use Tax
Description
Printing; Resales; Swatch cards
Topic
Taxability of Persons and Transactions
Date Issued
08-10-1994
August 10, 1994
Re: Request for Ruling: Retail Sales & Use Tax
Dear*************
This will reply to your letter seeking a ruling on the tax status of swatch cards used to advertise and promote the sale of***************** (the "Taxpayer") products.
FACTS
The Taxpayer produces swatch cards to advertise and promote the sale of its products. It has the cards printed and delivered to its Virginia plant where swatches are cut from fabric produced at the plant and glued to the cards. A majority of the completed swatch cards are shipped to customers and salesmen without Virginia to advertise and promote the sale of the fabric. Approximately 10% of the completed swatch cards remain in Virginia.
The Taxpayer currently is reporting and paying Virginia use tax on 100% of the cost of the fabric withdrawn from inventory to be converted into samples and on 10% of the cost of the swatch cards because only this portion is used in Virginia. You seek a ruling to verify whether the Taxpayer is appropriately accounting for the tax.
RULING
Subdivision 4 of Va. Code §58.1-609.6 provides an exemption from the retail sales and use tax for:
-
- [c]atalogs, letters, brochures, reports, and similar printed materials, except administrative supplies, the envelopes, containers and labels used for packaging, ... when stored for twelve months or less in the Commonwealth and distributed for use without the Commonwealth.
- [c]atalogs, letters, brochures, reports, and similar printed materials, except administrative supplies, the envelopes, containers and labels used for packaging, ... when stored for twelve months or less in the Commonwealth and distributed for use without the Commonwealth.
Accordingly, the Taxpayer should continue to accrue use tax on 100% of the cost of the fabric withdrawn from inventory and pay sales tax to the printer if a registered dealer in Virginia or, if the printer is not a registered dealer, remit use tax on the total cost of the cards.
If you have any further questions about this matter, please let me know.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/723lH
Rulings of the Tax Commissioner