Did a bank's quarterly financial statements, year-end preview, and separate annual report all qualify as one exempt periodical series?

Plain-English summary

San Francisco Auditing's absent September 22, 1966 letter asked about financial publications printed for a redacted entity. The live annotation identifies a bank; the supporting memo does not.

From submitted but absent samples, Tax Counsel understood that the entity published financial statements regularly at the end of the first, second, and third quarters. At year-end it issued a capsule preview of its annual report. A different printer produced the full annual report at year-end.

The three quarterly statements and year-end preview qualified as exempt periodicals under the 1966 analysis because of their regular publication and similar content and format.

The annual report apparently did not qualify. Counsel expressly presumed that it lacked similar format and was not part of a publication series, so the conclusion was tentative rather than based on stated sample details.

Later authority and source limits

The live annotation includes a 2003 note that section 6362.7, operative November 1, 1992, required free distribution or sale by subscription for the periodical exemption. A later August 23, 1988 official opinion published as Annotation 195.0115 cites 385.1060 while applying the series distinction to a different request: an annual report serving as the fourth-quarter report qualified with three quarterly reports, while an annual report separate from the quarterly series was taxable. Neither later source supplies the missing 1966 record or establishes current treatment.

The official 385.1060 PDF does not include the September 22 request, submitted samples, quarterly statements, year-end preview, annual report, issue or distribution schedules, content or format comparisons, publisher or bank identity, either printer, printing agreements, prices or invoices, sales, distributions, subscriptions, returns, exemption documentation, tax calculations or payments, audit, assessment, claim, appeal, or outcome. The entity, printers, recipients, transactions, and amounts are redacted or unidentified.

The live annotation preserves the three quarterly statements, year-end preview, regularity and similarity rationale, exempt-periodical result, and separate annual-report result. It adds that the entity was a bank and states rather than presumes the annual report's format and series differences. Its 2003 note adds section 6362.7's operative date and free-distribution-or-subscription condition. It omits the request, submitted-sample basis, separate-printer fact, memo's tentative wording, later 1988 cross-reference, missing records, redactions, and absent outcome.

What this means for you

Banks, financial-report publishers, and tax professionals

Recurring timing alone may not join reports into one series. Preserve every issue and sample, publication and delivery schedule, content and format comparison, printer agreement, invoice, distribution, subscription, sale, return, exemption record, tax calculation, and payment.

Common questions

Q: Which publications qualified?

A: The three quarterly financial statements and the similar year-end capsule preview.

Q: Did the annual report qualify?

A: Apparently not, based on the assumed different format and lack of series continuity.

Q: Was the annual-report conclusion definitive?

A: No. The opinion used tentative language and an assumption about its format.

Q: Did the 1966 memo identify the publisher as a bank?

A: No. The supporting memo redacts the entity; the live annotation supplies the bank description.

Q: Did later law add another condition?

A: Yes. The live page's 2003 note says section 6362.7 required free distribution or sale by subscription from November 1, 1992.

Citations and references

• The supporting 1966 memorandum cites no numbered statute or regulation.
• September 22 request and submitted samples — described but not included
• California Revenue and Taxation Code § 6362.7, operative November 1, 1992 — 2003 live-annotation note
• California Business Taxes Law Guide Annotation 195.0115 (August 23, 1988) — later application citing 385.1060
• Reports, schedules, printer agreements, invoices, distribution, subscriptions, transactions, tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Headquarters Tax Counsel memorandum:

In view of the regularity of publication of the quarterly financial statements, together with the year-end report, and the similarity in their content and format, it is our opinion that they qualify as exempt periodicals.

since the annual report is published by another printer and, presumably, is not of a similar format nor one of a series of publications, it does not appear to us to qualify as an exempt periodical.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.1060
• Original supporting opinion: 385.1060 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

To:

San Francisco – Auditing (LC:REP)

From:

Tax Counsel (GAT) – Headquarters

385.1060

Date:

September 27, 1966

Subject:

This is in reply to your letter of September 22, 1966, regarding the quarterly financial statements, year-end report, and annual report which are printed for --- --- ---. It is our understanding, from an examination of the samples which you submitted, that the three quarterly financial statements are published regularly at the end of the first, second, and third quarters by --- --- ---. The year-end report is issued at the end of the year as a capsule preview of the --- --- annual report. The annual report is issued at the end of the year and is printed by a different company. In view of the regularity of publication of the quarterly financial statements, together with the year-end report, and the similarity in their content and format, it is our opinion that they qualify as exempt periodicals. On the other hand, since the annual report is published by another printer and, presumably, is not of a similar format nor one of a series of publications, it does not appear to us to qualify as an exempt periodical.

GAT: mm