Who was the retailer responsible for collecting California use tax when a society hired a list manager to promote mailing-list rentals?

Plain-English summary

An out-of-state society appointed a company as “list manager” for a mailing list. The out-of-state characterization appears in CDTFA's live annotation; the PDF redacts every party and list name. Under the described agreement, the manager promoted rentals of the names and bore every expense of that promotion and sales effort.

The manager retained 30 percent of the gross rental price. If a third-party broker participated, the manager remitted 20 percent to the broker and retained 10 percent for its own services.

Based on the supplied information, counsel believed the society remained the lessor of the lists and the manager merely acted as its agent. The society therefore was the retailer responsible for collecting California use tax from lessees.

Source and publication limits

The PDF says a copy of the agreement was submitted, but it does not reproduce that agreement or the March 2 request. It identifies no rental date, California lessee, list delivery format, use restriction, invoice, payment, seller's permit, registration, collected amount, return, audit, assessment, or later outcome. It cites no statute, regulation, ruling, case, or other legal authority, and its conclusion is framed as what counsel believed from the information provided.

The live annotation preserves the out-of-state society, manager appointment, promotion duties and expenses, 30-percent compensation, agency result, society-as-lessor classification, and collection responsibility. It omits the possible third-party broker, the 20/10-percent compensation split, March 2 request, complete redaction, tentative wording, lack of cited authority, and missing records.

What this means for you

List owners, managers, and brokers

Compensation retention and sales activity did not by themselves make the manager the lessor under this agreement. Contractual roles and agency substance controlled.

Accountants and tax professionals

Identify the list owner, lessor, agent, broker, contracting party, gross rental price, retained commissions, lessees, and party responsible for California collection.

Common questions

Who was the lessor?

Counsel believed it was the society.

What role did the list manager have?

It acted as the society's agent under the described agreement.

Who had to collect California use tax?

The society, as retailer.

Citations and references

• March 2, 1992 request about use tax on mailing-list rentals — referenced but not included
• Submitted list-management agreement appointing an agent, allocating promotion expenses, and dividing gross rental compensation with a possible broker — described but not included
• No statute, regulation, ruling, case, or other legal authority is cited in the opinion

Verbatim support

From the official May 6, 1992 letter:

Based on the information you have provided, we believe that REDACTED TEXT is the lessor of the lists, and REDACTED TEXT merely acts as an agent on behalf of REDACTED TEXT in managing the mailing list.

Accordingly, we believe that REDACTED TEXT is the retailer responsible for collecting California use tax from the lessees.

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/340-0160.pdf

Original ruling text

340.0160

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001
TELEPHONE (916) 445-6450

May 6, 1992
REDACTED TEXT

REDACTED TEXT
Dear REDACTED TEXT:
This is in reply to your March 2, 1992 letter regarding the application of use tax to charges for list rentals. You sent a copy of the agreement between REDACTED TEXT and REDACTED TEXT. The agreement provides that REDACTED appoints REDACTED TEXT to act as a “list manager” for the “REDACTED TEXT ” mailing list. Under the contract, the duty of REDACTED TEXT is to promote the rental of the names. REDACTED TEXT bears all expenses for that promotion and sales effort. For compensation, REDACTED TEXT retains 30 percent of the gross rental price. The contract goes on to indicate that a third party “broker” may be involved and that REDACTED TEXT will remit 20 percent of the gross rental price to the broker and retain only 10 percent for REDACTED TEXT services. Based on the information you have provided, we believe that REDACTED TEXT is the lessor of the lists, and REDACTED TEXT merely acts as an agent on behalf of REDACTED TEXT in managing the mailing list. Accordingly, we believe that REDACTED TEXT is the retailer responsible for collecting California use tax from the lessees. Very truly yours,

Ronald L. Dick
Senior Staff Counsel