Were advertiser payments taxable receipts when a publisher supplied maps to a chamber of commerce without direct chamber payment?

Plain-English summary

A publisher produced city maps bearing the local convention-and-visitors-bureau and chamber-of-commerce names. It gave the chamber maps without receiving a direct payment and instead retained advertising revenue beyond production costs.

The Board construed the publisher as selling the maps to the chamber. By authorizing direct advertiser payments, the chamber avoided soliciting advertisers, collecting their payments, and then paying the publisher. The advertiser amounts were therefore payments on the chamber's behalf and taxable gross receipts from the map sale.

Source-date note

The official letter's first page is dated November 21, 1991, while its second-page continuation header says December 20, 1991. This page follows the formal first-page date.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/295-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/295-0038.pdf

Original ruling text

295.0038

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-6450

November 21, 1991

Ms. D--- B--- T--Art Director
Production Manager
C--- M--- Incorporated
P. O. Box XXXX
---, CA XXXXX
SR -- XX-XXXXXX
Dear Ms. T---:
This is reply to your September 10, 1991 letter regarding the application of sales tax to your charges for publishing maps. You note the following facts: “We are beginning to publish a new type of map product, (sample included) where instead of selling the map directly to the customer, we are doing all sales in-house, and providing the customer free maps. We retain all advertising revenues beyond those required for production of the product. We are not sure how to handle the sales tax for this new product….” The sample map you sent is a city map of [City], California. On the front of the map is noted, “[City] Convention and Visitors Bureau, [City] Chamber of Commerce.” We construe this information to mean that you publish the maps on behalf of the [City] Chamber of Commerce. You do not receive payment directly from the Chamber of Commerce, but rather you are compensated for your cost of publication out of the proceeds from the sale of advertising space to persons who place advertising on the maps. By authorizing you to receive payment directly from the advertisers, the Chamber of Commerce obviates the necessity of soliciting the advertisers for the placement of advertisements, collecting payment from the advertisers, and paying you out of such proceeds.

Ms. D--- B--- T---

-2-

December 20, 1991
295.0038

We conclude that you are selling the maps to the Chamber of Commerce and that the amounts paid by the advertisers to you are paid in behalf of the Chamber of Commerce for the publication of the maps. According, you are the retailer of the maps. The amounts you receive from the advertisers are taxable gross receipts from such retail sales. We hope this answers your questions; however, if you need further information, feel free to write again. Very truly yours,

Ronald L. Dick
Senior Tax Counsel

RLD:sr