Did a shopping guide qualify as an exempt periodical when roughly 30 square inches were possible general-interest content and 1,680 were advertising or product publicity?

Plain-English summary

Sacramento Auditing sent Headquarters Tax Counsel a February 8, 1966 memorandum with an attached issue of a redacted Modesto publication. Neither the audit memo nor issue is reproduced.

The proposed revision of former Ruling 50 excluded shopping guides and other publications whose advertising portion, including product publicity, exceeded 90 percent of the entire issue's printed area in more than half the issues during any 12-month period.

Tax Counsel EHS's rough calculation attributed about 30 square inches to what the source calls “new items of general interest” and 1,680 square inches to advertising or “products publicity.” Counsel said the 10-percent test clearly was not met.

The attached issue did not qualify as an exempt periodical under either the proposed Ruling 50 amendment or prior unidentified tests. Delivering it alone as a throwaway unattached to other news media did not make it exempt. The source does not include the issue, area workpaper, tax amount, transaction, or outcome.

Source and live-annotation limits

The official PDF does not include the February 8 audit memorandum, attached publication issue, title, publisher, publication schedule, other issues in the 12-month period, general-interest items, advertisements, product publicity, printed-area workpaper, customers, distribution records, attachment to any other news medium, prices, invoices, sales, returns, tax calculations or payments, audit, assessment, claim, appeal, or outcome. The publisher, publication, advertisers, customers, transactions, and amounts beyond the rough area figures are redacted or unidentified.

The source prints 90%of, “new items of general interest,” “products publicity,” and “exempt periodical” without an article. The original-text section preserves those forms rather than silently correcting the official record.

The live annotation preserves only the shopping-guide classification, over-90-percent advertising-or-product-publicity finding, printed-area basis, and nonexempt conclusion. It omits the audit and counsel routing, absent memo and issue, proposed Ruling 50 quotation and more-than-half-of-issues/12-month formula, unidentified prior tests, rough 30/1,680-square-inch calculation, “new items” wording, 10-percent conclusion, unattached-throwaway analysis, missing records, redactions, and absent outcome.

What this means for you

Shopping-guide publishers, printers, and tax professionals

Preserve every issue in the measurement period, publication schedule, content and ads, printed-area workpapers, distribution and attachment records, contracts, invoices, sales, returns, tax calculations, and payments. Do not assume stand-alone throwaway delivery changes classification.

Common questions

Q: What did counsel count as possible general-interest content?

A: Roughly 30 square inches of what the source calls “new items of general interest.”

Q: How much was advertising or product publicity?

A: Roughly 1,680 square inches.

Q: Did unattached throwaway delivery make it exempt?

A: No.

Q: Was the 30/1,680-square-inch workpaper published?

A: No. The memo gives only counsel's rough figures; the issue and calculation record are absent.

Citations and references

• Proposed revision of former California Sales Tax Ruling 50
• Prior periodical tests used before the proposed revision — not identified or included
• February 8 audit memo and attached issue, publication and distribution records, area measurements, transactions, tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Headquarters Tax Counsel memorandum:

Neither does it include shopping guides or other publications of which the advertising portion, including product publicity, exceeds 90%of the printing area of the entire issue in more than one-half of the issues during any 12 month period.

My own rough calculations are that 30 square inches of the issue attached to your memo consists of what might be regarded as new items of general interest. 1,680 square inches appears to constitute advertising or products publicity. Thus, the 10 percent test is clearly not met.

Thus, it would not be considered exempt when delivered as a throw-away not attached to any other news media.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.0960
• Original supporting opinion: 385.0960 PDF

Original ruling text

385.0960

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

February 14, 1966

To:

Sacramento – Auditing (CNW)

From: Tax Counsel (EHS) – Headquarters

--- --- --- -----.---. --- XXX
Modesto

The copy of this publication attached to your memo of February 8, 1966, does not appear to qualify as an exempt periodical under either the proposed revision of ruling 50, or under the past tests which have been used. The proposed revision contains the following statement regarding what is included in the term “periodical.” “Neither does it include shopping guides or other publications of which the advertising portion, including product publicity, exceeds 90%of the printing area of the entire issue in more than one-half of the issues during any 12 month period.” My own rough calculations are that 30 square inches of the issue attached to your memo consists of what might be regarded as new items of general interest. 1,680 square inches appears to constitute advertising or products publicity. Thus, the 10 percent test is clearly not met. I do not think that the publication represented by the issue attached to your memo would be considered exempt periodical either before or under the proposed amended ruling 50. Thus, it would not be considered exempt when delivered as a throw-away not attached to any other news media.

EHS: fb
CLD