Was a weekly insert sale nontaxable when its buyer arranged newspaper distribution but did not sell the completed newspaper?

Plain-English summary

A redacted company's credit manager asked about sales tax on charges for a redacted publication. The requester said it was printed weekly and delivered by the company to a daily newspaper for insertion once each week.

Because no further facts were supplied, counsel assumed the company did not sell the insert to the newspaper publisher. Instead, it sold to another person who contracted with the publisher to distribute the insert as a component of the newspaper.

California stated the Board's position that tax did not apply to tangible personal property purchased for incorporation as a component of a newspaper or periodical that would be sold. The property purchaser did not also have to sell the completed publication. On counsel's expressly assumed facts, the company's insert sale was not taxable.

Source and live-annotation limits

The official PDF does not include the April 28, 1994 request, weekly publication, insert, newspaper, printing or delivery records, seller-buyer agreement, buyer-publisher contract, purchase order, invoice, price, title terms, newspaper sale, insertion or distribution evidence, resale or exemption document, return, tax calculation or payment, audit, assessment, claim, appeal, or other outcome. The company, credit manager, publication, buyer, newspaper publisher, daily newspaper, account, district, and recipients are redacted.

The source cites no statute, regulation, case, annotation, ruling, or prior opinion for the stated Board position. Its first page is dated July 7, 1994, while the second-page continuation header prints July 6, 1994. This page follows the formal first-page date and discloses the conflict.

The live annotation generalizes the result to publications inserted and distributed as newspaper or periodical components. It omits the April request, weekly and daily publication timing, company delivery, absence of further facts, assumed sale and contract chain, completed-publication sale condition, missing authority, date conflict, redactions, missing records, and absence of a documented transaction or outcome.

What this means for you

Insert sellers, publishers, advertisers, and tax professionals

Document the buyer's intended component use, each contract in the sale and publisher chain, delivery, actual insertion and distribution, and the completed newspaper or periodical's sale.

Common questions

Q: Did the insert buyer have to sell the newspaper?

A: No.

Q: Was the company's insert sale taxable?

A: No, assuming the insert was bought for incorporation and distribution as a component of the newspaper.

Q: Did the opinion rely on fully developed facts?

A: No. Counsel expressly stated assumptions because the requester provided limited detail.

Citations and references

• The Board's newspaper-and-periodical component position — stated without a statute, regulation, ruling identifier, or prior source
• April 28, 1994 request, weekly publication, contracts, sale, insertion and distribution records, tax records, and outcomes — described or implicated but not documented

Verbatim support

From the official Senior Tax Counsel letter:

You did not provide further facts.

We assume that C--- P--- does not sell the publication to the publisher of the newspaper but sells it to another person who contracts with the publisher of the newspaper to have the publication distributed as a component part of the newspaper.

Assuming that these are the facts concerning your sale of the publication “T---”, tax does not apply to your sale of the publication.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.0355
• Original supporting opinion: 385.0355 PDF

Original ruling text

385.0355

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District

450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-6450

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento
────────
BURTON W. OLIVER
Executive Director

July 7, 1994

Ms. P--- A--- L--Credit Manager
C--- P--P. O. Box XXX
--- ---, CA XXXXX
Re:

SR --- XX-XXXXXX

Dear Ms. L---:

This is in reply to your April 28, 1994 letter regarding the application of sales tax to charges by C--- P--- of the publication “T---”. You note that the publication is printed weekly and delivered by C--- P--- to a daily newspaper to be inserted once a week. You did not provide further facts. We assume that C--P--- does not sell the publication to the publisher of the newspaper but sells it to another person who contracts with the publisher of the newspaper to have the publication distributed as a component part of the newspaper. The Board of Equalization has taken the position that tax does not apply to sales of tangible personal property to persons who purchase the property for incorporation as a component part of a newspaper or periodical which will be sold notwithstanding that the purchaser is not the seller of the newspaper or periodical. Assuming that these are the facts concerning your sale of the publication “T---”, tax does not apply to your sale of the publication.

Ms. P--- A--- L---

-2-

July 6, 1994
385.0355

We hope this answers your question(s); however, if you need further information, feel free to write again. Very truly yours,

Ronald L. Dick
Senior Tax Counsel
RLD:plh

cc:

--- District Administrator - --