Ezel / Tax Rulings / CA

Were promotional materials sold to retailers for free distribution to their customers taxable retail sales?

Short answer Yes. The source treated the purchasing retailers as consumers of ordinary promotional material they gave away, making the seller's California sales taxable retail sales.
State
CA
Ruling
Annotation 280.0820
Tax type
Sales and Use Tax
Issued
1965-09-27
Issued by
California State Board of Equalization
Requested by
A seller of promotional material (identity redacted)
Topics
promotional materials retailer as consumer retail sales tax reimbursement
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1965. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1965
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This Sept. 27, 1965 assistant-counsel letter addresses ordinary promotional material sold to retailers for free customer distribution. The PDF does not reproduce the undated-year Sept. 15 request, promotional items, orders, invoices, retailer promotion terms, customer-purchase evidence, distribution records, returns, tax payments, reimbursement records, or enclosed Ruling 49 copy. CDTFA's current annotation preserves the retail-sale point but omits the supplier's payment and reimbursement directions and Ruling 49. Another taxpayer should check current promotional material, customer giveaway, purchase condition, retailer-consumer, resale, documentation, collection, reimbursement, and sales-and-use-tax law. Another taxpayer should not treat it as binding. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A seller supplied promotional material to retailers. The retailers gave the material free to customers who bought certain products.

The letter treated ordinary promotional material as used by the retailer that distributed it. The retailer's purchase was therefore at retail, and the supplier's California sale was taxable.

The supplier was told to pay sales tax on those California sales and could collect sales-tax reimbursement from its customers. The letter also referenced an enclosed historical Ruling 49 on labels and containers, but that enclosure is not included in the source PDF.

Citations and references

  • Historical California Sales and Use Tax Ruling 49, labels and containers — characterized; copy identified as enclosed but not reproduced in the official PDF
  • Seller's Sept. 15 request — question and facts recited; year, letter, product samples, and attachments not reproduced in the official PDF
  • California promotional-material sales, retailer customers, free distribution, specified-product purchases, sales-tax payment, and customer reimbursement — facts and direction supplied; promotional items, orders, invoices, retailer promotion terms, customer-purchase evidence, distribution records, returns, tax payments, and reimbursement records not reproduced in the official PDF
  • Official Annotation 280.0820's retailer purchase, free customer distribution, specified-product purchase, and taxable-retail-sale summary — annotation omits the seller's payment and reimbursement directions and Ruling 49 enclosure and supplies no additional transaction record
  • Possible later promotional sale or distribution, return filing, audit, assessment, payment, refund claim, appeal, or other agency action — not supplied in the official PDF

Source

Original ruling text

280.0820

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

September 27, 1965

--- --- ----- --- ----- --- --Gentlemen:
This is in reply to your letter of September 15 in which you inquire if your sales of promotional material to customers are retail sales. We understand that your customers use the promotional material by giving it to their customers who purchase certain of their products. Ordinary promotional material is considered to be used by the retailer who distributes it free and its purchase is at retail. Accordingly, you should pay sales tax on your California sales of such material; you should, of course, collect sales tax reimbursement from those customers. For your ready reference, we are enclosing a copy of Ruling 49 which is concerned with the general application of the Sales and Use Tax Law to sales of labels and containers. If you have any further questions, please do not hesitate to write to us again. Very truly yours,

Philip R. Dougherty
Assistant Counsel

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