Do legally required notices count as advertising when California applies the 90% advertising limit for periodicals and shopping guides?

Plain-English summary

A redacted requester asked whether legally required notices belonged to a publication's advertising portion or its general-interest information. The requester argued they were informational, not advertising, because they did not seek a product purchase.

California rejected that narrow definition. For Regulation 1590's periodical test, the advertising portion includes all forms of advertisements, public announcements, notices, and product publicity.

Legal notices therefore counted as advertising when determining whether a shopping guide or other publication exceeded 90 percent of printed area in more than half its issues during a 12-month period. The letter clarified the input to that exclusionary test; it did not apply the measurement to a supplied publication.

Source and live-annotation limits

The official PDF does not include the November 23, 1983 request, publication, issues, legal notices, statutory notice requirements, advertising, printed-area measurements, 12-month issue history, customers, prices, sales, invoices, returns, tax calculations or payments, audit, assessment, claim, appeal, or later outcome. The requester, publication, notices, transactions, amounts, and copied district administrator are redacted or unidentified.

The source says the advertising portion “is not only limited and restricted” to product-or-service promotion before broadening the category. The live annotation instead says it “is not limited or restricted,” while preserving the resulting rule. This page does not silently substitute one phrase for the other in the original text.

The live annotation preserves the all-advertisements, public-announcement, notice, product-publicity, and legal-notice conclusions. It omits the November request, requester argument and legally required premise, full periodical definition, exact 90-percent/more-than-half/12-month test, emphasis, missing records, redactions, and outcome limits.

What this means for you

Publishers and tax professionals

When measuring a publication's advertising portion, include legal and public notices even if law requires them and they do not promote a commercial purchase. Preserve every issue, each notice and advertisement, printed-area calculations, the 12-month history, returns, and current classification analysis.

Common questions

Q: Did legal notices count as news or information instead?

A: No. For the Regulation 1590 exclusion test, Tax Counsel counted them in the advertising portion.

Q: Is advertising limited to messages that sell products or services?

A: No. The opinion included public announcements, notices, and product publicity.

Q: Did the opinion decide that the requester's publication was taxable?

A: No. It clarified how legal notices should be counted when applying the test.

Citations and references

• California Sales and Use Tax Regulation 1590(a)(2)
• November 23, 1983 request, publication, issues, legal notices, measurements, transaction, and tax records — described or implicated but not documented

Verbatim support

From the official Tax Counsel letter:

The “advertising portion” of a shopping guide or other publication includes all forms of advertisements.

Therefore, in our view, a shopping guide or other publication’s advertising portion would include legal notices when the exclusionary test under Regulation 1590(a)(2) is applied.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.0742
• Original supporting opinion: 385.0742 PDF

Original ruling text

385.0742

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
916/445-6493

February 3, 1984

Mr. A--- J. S--XXXX -----, CA XXXXX

Dear Mr. S---:

Your letter of November 23, 1983 has been referred to me for reply. You request clarification of the term “advertising portion,” as it is used in subsection (a)(2) of Sales and Use Tax Regulation 1590, “Newspapers and Periodicals.” As defined under Regulation 1590(a)(2), the term “periodical” is limited to those publications which appear at stated intervals, each issue of which contains news or information of general interest to the public, or to some particular organization or group of persons. Excluded from the term “periodical,” however, are “shopping guides, or other publications of which the advertising portion, including product publicity, exceeds 90 percent of the printed area of the entire issue in more than one-half of the issues during any 12-month period.” (Emphasis added.) You ask whether legal notices are considered “the advertising portion, including product publicity,” or is it that portion “which contains news or information of general interest to the public.” It is your contention that the term “advertising” refers only to product publicity wherein the purpose of the advertising is to have the reader purchase, whereas legal notices are strictly informational and are required by law. The meaning of the term “advertising portion,” as it is used in Regulation 1590, is not as narrow as you contend. The “advertising portion” of a shopping guide or other publication includes all forms of advertisements. This part of such publications is not only limited and restricted to the type of advertisements which have as their purpose the sale of a product or service, but instead includes all forms of public announcements and notices, as well as encompasses product publicity.

Mr. A--- J. S---

-2-

February 3, 1984
385.0742

Therefore, in our view, a shopping guide or other publication’s advertising portion would include legal notices when the exclusionary test under Regulation 1590(a)(2) is applied. If you have any further questions concerning this matter, please write this office. Very truly yours,

Charles J. Graziano
Tax Counsel

CJG:ba
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--- --- – District Administrator