Bulletin Number
VTB 86-12
Tax Type
Retail Sales and Use Tax
Description
Media Advertising; Exemption
Topic
Exemptions
Date Issued
07-01-1986
The 1985 General Assembly (HB 1472, Chapter 473) exempted from the sales and use tax charges for media advertising, effective July 1, 1986. On April 9, 1986 the department submitted proposed sales and use tax regulation VR 630-10-3: Advertising, to the Registrar of Regulations for publication in the April 28, 1986 issue of the Virginia Register. A public hearing has been scheduled for July 8, 1986 at 10:00 a.m. in House Room C of the General Assembly Building, Richmond, Virginia. This bulletin is issued by the department pending completion of the regulation development process and publication of the final sales and use tax regulation of advertising.
Effective July 1, 1986 the sales and use tax will not apply to charges for advertising, which is defined as the planning, creating or placing of advertising in newspapers, magazines, billboards, broadcasting and other media, including without limitation, the provision of concept, writing, graphic design, mechanical art, photography and production supervision. Any person providing advertising as so defined, shall be deemed to be the user or consumer of all tangible personal property purchased for use in such advertising and must therefore either pay the sales tax on such items to suppliers or remit the use tax on such items directly to the department.
"Other media' is defined by the proposed regulation to include newspapers, magazines, billboards, direct mail, radio, television and other modes of communication. An "advertising business' is defined by the proposed regulation to mean any person or group of persons providing "advertising' as defined above.
Therefore, the tax will not apply to charges for professional advertising services in the planning, creating or placing of media advertising whether or not the advertising business itself actually places the advertising in the media and regardless of the methods used by the advertising business in billing for such advertising services.
Furthermore, the tax does not apply to charges for professional advertising services whether or not all of such services are performed by the same advertising business. For example, an advertising business' purchase of professional advertising services performed by another advertising business, (pursuant to the development of a media advertising campaign), will not be subject to the tax. Similarly, an advertising business' charges to its client for such services performed by another advertising business will not be subject to the tax.
However, in accord with all of the above, an advertising business' purchase of administrative items, such as paper, ink, pencils, layout boards, blank audio and video tapes, etc., will be subject to the tax. An advertising business will also be subject to the tax on all its purchases of printing, direct mail items, mailing lists, handbills, brochures, flyers, bumper stickers, posters, etc. Furthermore, an advertising business' purchase of promotional items, such as pens, pencils, ash trays, calendars, balloons, t-shirts, etc., will be subject to the tax.
In addition, an advertising business' purchase of concept writing, graphic design, mechanical art, photography, etc., not made pursuant to the development of a specific media advertising campaign will be subject to the tax. For example, an advertising business' purchase of a portfolio of scenic photographs for possible use in future media advertising campaigns will be subject to the tax.
If you have any questions, please feel free to contact the Department of Taxation, P. O. Box 6-L, Richmond, Virginia 23282, or telephone (804) 257-8037.
Tax Bulletins