Did California treat an annual X Directory as an exempt thirteenth issue of X Magazine, and was the letter the final Board action?

Plain-English summary

California Associate Tax Counsel Jack D. Paulson reviewed an unnamed petition for redetermination and auditor information concerning an annual X Directory published as the thirteenth edition of X Magazine. Staff concluded that the directory was in fact a thirteenth magazine issue and qualified as an exempt periodical under former section 6362.

The only protested item was part of Item C of an absent audit report, representing directory sales. The letter proposed a reaudit deleting that item from the determinations and redetermining tax in a reduced amount. It assumed the requested preliminary hearing was no longer wanted and said the matter would go to the Board's nonappearance calendar with that recommendation. The petitioner was to receive official notice later; the source does not reproduce that Board action, final liability, or outcome.

An August 12, 1997 editorial note by DHL says the opinion was probably unsuitable for annotation because it did not explain the facts establishing continuity of literary character or subject matter under Regulation 1590(a)(2). The note reads the opinion as establishing only that a thirteenth edition can be part of an otherwise monthly periodical series on appropriate facts.

Source and live-annotation limits

The official PDF does not include the petition, Item C audit report, auditor information, X Magazine or X Directory issues, publication schedule, literary or subject-matter comparison, subscriber or distribution records, no-extra-cost terms, contracts, invoices, directory sales, returns, tax calculations or payments, preliminary-hearing request or withdrawal, reaudit, formal Board action, claim, appeal, or later outcome. The petitioner, magazine, directory, subscribers, transactions, and amounts are redacted or unidentified.

The source prints “Whether an publication,” “quality as a periodical,” “w/o,” and “in respect to continuity.” The original-text section preserves those forms rather than silently correcting the official record.

The live annotation preserves the directory's annual, thirteenth-edition, and exempt-periodical classifications. It adds that the directory was distributed to periodical subscribers at no extra cost, facts the supporting letter and 1997 note do not state. It omits the petition and auditor-information basis, Item C and directory sales, proposed reaudit and reduced tax, preliminary hearing, nonappearance calendar, later-notice limit, section 6362, 1997 note and Regulation 1590(a)(2), missing records, redactions, and absent outcome.

What this means for you

Magazine publishers, directory publishers, and tax professionals

Calling an annual directory a thirteenth issue is not enough by itself. Preserve every magazine and directory issue, publication schedule, literary and subject-matter continuity, subscriber and distribution records, no-extra-cost terms, sales, invoices, returns, tax calculations, audit records, and final agency action.

Common questions

Q: What did staff conclude about the directory?

A: It was a thirteenth issue of the magazine and an exempt periodical.

Q: Was the letter itself the final Board action?

A: No. It proposed a recommendation and said official notice of later Board action would follow.

Q: What limitation did the 1997 note identify?

A: The opinion did not explain the facts showing continuity between the directory and the other twelve magazine issues.

Q: Does the supporting letter say subscribers received the directory at no extra cost?

A: No. That statement appears in the live annotation, not in the letter or 1997 note.

Citations and references

• Former California Revenue and Taxation Code § 6362
• California Sales and Use Tax Regulation 1590(a)(2), discussed in the August 12, 1997 editorial note
• Petition for redetermination, Item C audit report, auditor information, publications, distribution, sales, tax records, and final Board action — described or implicated but not documented

Verbatim support

From the official Associate Tax Counsel letter and editorial note:

It has been concluded that the "X" Directory issued and published annually as the 13th edition of "X" Magazine is, in fact, a 13th issue of the magazine and is an exempt periodical under Section 6362 of the Sales and Use Tax Law.

Accordingly, this matter will be scheduled for action on the nonappearance calendar of the Board with the recommendation that this item be deleted from the determinations. You will receive official notice of action taken in due course.

Whether an publication is part of a series of issues quality as a periodical is a question of fact.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.0880
• Original supporting opinion: 385.0880 PDF

Original ruling text

385.0880

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

May 26, 1965

Gentlemen:
We have reviewed your petition for redetermination in the light of information submitted by you and information obtained by our auditors. It has been concluded that the "X" Directory issued and published annually as the 13th edition of "X" Magazine is, in fact, a 13th issue of the magazine and is an exempt periodical under Section 6362 of the Sales and Use Tax Law. We understand that the only item protested was a portion of Item C of the audit report representing sales of the Directory. Since we have concluded that this issue is an exempt periodical, we propose to recommend to the Board that a reaudit be made deleting this item from the determinations and that the tax be redetermined in the reduced amount. In view of our proposed recommendation, we assume the preliminary hearing requested by you is no longer desired. Accordingly, this matter will be scheduled for action on the nonappearance calendar of the Board with the recommendation that this item be deleted from the determinations. You will receive official notice of action taken in due course.

Very truly yours,
Jack D. Paulson
Associate Tax Counsel

JDP:md
[lb]
Note: This opinion was probably not really suitable for annotation because it does not add anything. Whether an publication is part of a series of issues quality as a periodical is a question of fact. This opinion just says the 13th issue was w/o explaining why, thus, the only thing this opinion actually says is that it’s possible that a 13th edition of an otherwise monthly publication is part of the series of periodicals. Presumably, the “X” directory bore a relationship to the other 12 issues in respect to continuity of literary character or subject matter, etc, as covered by Reg 1590 (a) (2). DHL 8/12/97