Did the Central Valley Shopping Guide qualify as an exempt periodical when it appeared regularly but its claimed public-interest items functioned as want ads?

Plain-English summary

An unnamed publisher's May 1 and June 7 letters, sent through district-office employee J. T. Quick, argued that the Central Valley Shopping Guide qualified as an exempt periodical under former Ruling 50. The publisher said it appeared at the required intervals and that at least 25 percent of each issue contained public-interest articles, including 10 percent continuing material.

Ruling 50 required each issue to relate to earlier or later issues through literary continuity or similar subject matter, with a connection among the series' articles. The letter traced that definition to Business Statistics Organization, Inc. v. Joseph, 87 N.E.2d 505, which described a periodical as appearing at stated intervals with varied original articles by different authors on general literature, a special branch of learning, or a special subject class.

After examining submitted sample copies and fly sheets, Tax Counsel T. P. Putnam agreed that the guide appeared at stated intervals. He disagreed that it contained enough news of general public interest. Items presented as news, including Pet News, were substantively free want ads for advertisers and lacked literary continuity or connection among issues.

Counsel therefore found advertising above 90 percent of the entire issue's printed area. The submitted samples and later issues with the same format were not exempt periodicals, and charges to the publisher for printing were subject to sales tax. No issue, advertising calculation, invoice, tax amount, or outcome is reproduced.

Source and live-annotation limits

The official PDF does not include the May 1 or June 7 letter, Shopping Guide issues, sample copies, fly sheets, article or author records, Pet News items, advertisements, printed-area measurements, publication schedule, publisher or printer identity, printing agreement, charges or invoices, sales, returns, tax calculations or payments, audit, assessment, claim, appeal, or outcome. The requester, publisher, printer, advertisers, transactions, and amounts are redacted or unidentified.

The source repeats “submitted” in one sentence and says each issue “maintains” articles. The original-text section preserves those forms rather than silently correcting the official record.

The live annotation preserves the guide name, regular-interval fact, nonexempt conclusion, and over-90-percent advertising measure. It omits the two requests and J. T. Quick, claimed 25-percent and 10-percent content shares, quoted Ruling 50 continuity test, Business Statistics definition, submitted samples and fly sheets, insufficient-news finding, Pet News and free-want-ad analysis, later same-format issues and taxable printing charges, missing records, redactions, and absent outcome.

What this means for you

Shopping-guide publishers, printers, and tax professionals

Labels do not control content classification. Preserve every issue, article and author, editorial plan, publication schedule, ad and printed-area calculation, advertiser record, printer agreement, invoice, sale, return, tax calculation, and payment.

Common questions

Q: Did the guide meet the regular-schedule requirement?

A: Yes.

Q: Why did it still fail?

A: The claimed news items functioned as want ads, leaving advertising above 90 percent of printed area.

Q: What sales were addressed?

A: Charges to the publisher for printing the guide.

Q: Did the letter classify every future Shopping Guide issue?

A: No. It extended the result only to subsequent issues using the same format as the submitted samples.

Citations and references

• Former California Sales Tax Ruling 50
• Business Statistics Organization, Inc. v. Joseph, 87 N.E.2d 505
• May 1 and June 7 requests, samples and fly sheets, content and advertising records, printing agreement, invoices, transactions, tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Tax Counsel letter:

Each issue must bear a relationship to prior or subsequent issues in respect to continuity of literary character or similarity of subject matter, and there must be some connection between the different issues of the series in the nature of the articles appearing in them.

It is our opinion that items submitted as news of public interest, i.e., Pet News, are in substance free want ads for the advertiser and do not bear a relationship in respect to continuity of literary character or connection between the different issues in the nature of the articles appearing in them.

the Shopping Guide samples and subsequent issues with the same format would not be considered exempt periodicals and charges to you for printing would be subject to sales tax.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.0940
• Original supporting opinion: 385.0940 PDF

Original ruling text

385.0940
STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

July 3, 1968

Gentlemen:
Your letter of May 1 and June 7 to Mr. J. T. Quick of our district office has been referred to the undersigned for reply. We understand your position is that the Central Valley Shopping Guide qualifies as an exempt periodical under Ruling 50 in that it is being published at required regular intervals and that at least 25 percent of each issue maintains articles of public interest, 10 percent of which are on a continuing basis. Ruling 50 provides in part: “... Each issue must bear a relationship to prior or subsequent issues in respect to continuity of literary character or similarity of subject matter, and there must be some connection between the different issues of the series in the nature of the articles appearing in them.” This definition is based upon Business Statistics Organization, Inc. v. Joseph, 87 N.E. 2d 505, which defined a periodical as a publication appearing at stated intervals, each number containing a variety of original articles by different authors devoted either to general literature of some special branch of learning or to a special class of subjects. An examination of the submitted sample copies and fly sheets submitted indicate that the “Shopping Guide” does meet the requirement of publication at stated intervals. However, we do not agree that it contains sufficient news of general interest to the public as required in Ruling

50. It is our opinion that items submitted as news of public interest, i.e., Pet News, are in
    substance free want ads for the advertiser and do not bear a relationship in respect to continuity of literary character or connection between the different issues in the nature of the articles appearing in them. Thus, the advertising portion of the Shopping Guide exceeds 90 percent of the printing area of the entire issue. It is our opinion, therefore, that the Shopping Guide samples and subsequent issues with the same format would not be considered exempt periodicals and charges to you for printing would be subject to sales tax.

Very truly yours,
T. P. Putnam
Tax Counsel
By Burt E. Banks
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