Were monthly address-file work, address-label printing, and separately requested address-list printouts taxable?

Plain-English summary

An address-data provider entered a customer's information into what the letter called a “diskette data file,” sorted it to the customer's specifications, produced proof copies, made corrections until approval, and updated the file before printing labels.

California said Regulation 1502(d)(3) made both the per-label charge and the flat monthly charge for maintaining the address file nontaxable. The monthly amount reportedly covered storage, a source-questioned “delivery,” changes or corrections, sorting, and proof copies.

Separately requested printouts of all or part of the customer's address list were taxable. Counsel said those outputs were neither mailing or addressing services nor nontaxable mailing lists because they furnished information the customer already had an unrestricted right to use. They were taxable material printed to special order.

Scope, date conflict, and missing records

The letter assumed that “diskette data file” referred to some type of computer. It did not independently describe the system or decide the treatment of a materially different data service.

The conclusion distinguishes outputs by function and request: proof copies used within the described label workflow were included in the monthly nontaxable charge, while a separate customer request for a full or partial address-list printout produced taxable printed material. The source does not provide the agreements, invoices, charge allocation, proof copies, final labels, printouts, or customer use-right records needed to test a different transaction.

The first page formally says June 9, 1982, while the continuation header says April 18, 1966. The letter responds to an undated request and does not explain that conflict. The live annotation uses June 9, 1982 and compresses the same three charge results. It omits the computer assumption, iterative proof-and-approval process, questioned “delivery” component, unrestricted-use rationale, missing Regulation 1504 enclosure, and conflicting continuation date.

Common questions

Were the monthly file-maintenance and per-label charges taxable?

No. Counsel treated both as nontaxable under Regulation 1502(d)(3) for the described workflow.

Why were separately requested address-list printouts taxable?

They were special-order printed material containing information the customer already had an unrestricted right to use, not the mailing or addressing service or mailing list described by the cited rules.

Does the source establish how every data-processing output is taxed?

No. It answers only the stated workflow and charges, and the underlying agreements, outputs, invoices, and customer-rights evidence are absent.

Citations and references

• California Sales and Use Tax Regulation 1502(d)(3)
• California Sales and Use Tax Regulation 1504(a)(1) and (a)(3)
• Regulation 1504 copy — referenced as an enclosure but not included
• Underlying request, customer agreements and data, invoices, outputs, and transaction records — not included

Verbatim support

From the official June 9, 1982 letter:

As provided in Regulation 1502(d)(3), tax does not apply to your charges for producing address labels. This includes both the label printing charge and the monthly charge for maintaining the address file.

Your charge is taxable, therefore, as the sale of material printed to the customer’s special order.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/340-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/340-0015.pdf

Original ruling text

340.0015

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
(916) 445-8900

June 9, 1982

Mr. J--- M--Mr. M--- M--dba M--- E--P. O. Box XXXX
--- ---, CA XXXXX

SR -- XX-XXXXXX

Gentlemen:
Your request for advice concerns the application of sales tax to charges for maintaining customer address data and the furnishing of address labels. Address information from your customer is entered on a “diskette data file” which, we assume, refers to some type of computer. The address data is sorted to the customer’s specifications and a proof copy (a print-out) of the sorted information is produced for customer review and approval. Corrections are made and more proof copies produced until final customer approval is received. When an order for address labels is received from the customer, the file is updated for any changes in address data, a proof copy is made to verify the accuracy of the update, and the address labels are then printed. The labels are delivered to the customer with an invoice. You charge a flat monthly fee for the file storage, delivery (?), file changes or corrections, sorting and proof copies. You make an additional charge for each label printed. You request advice on the application of sales tax to these charges and ask whether tax would apply to a separate charge for a specifically requested print-out of all or a portion of a customer’s address list. As provided in Regulation 1502(d)(3), tax does not apply to your charges for producing address labels. This includes both the label printing charge and the monthly charge for maintaining the address file. We would regard separate charges for address file print-outs, furnished at the customer’s request, to be taxable, however. This cannot be considered to be a mailing or addressing service. Further, we do not regard it as a nontaxable “mailing list”, as that term is described in

Mr. J--- M--Mr. M--- M---

-2-

April 18, 1966
340.0015

Regulation 1504(a)(1), and (a)(3) (copy enclosed), since you are simply furnishing information the customer already has an unrestricted right to use. Your charge is taxable, therefore, as the sale of material printed to the customer’s special order. Please contact us if you have any further questions. Very truly yours,

Richard Ochsner
Tax Counsel

RHO:jw
Enclosure
cc:

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