Could company house organs qualify as exempt periodicals when issued regularly at stated intervals of three months or less?

Plain-English summary

On May 15, 1950, California had answered an inquiry about four specified house organs printed by a member of the redacted requesting organization. The follow-up letter says the Board regarded them as periodicals regularly issued at average intervals no longer than three months. The prior letter and publications are absent.

The organization's April 14 and April 18 letters supplied unidentified definitions of “house organ.” Based on them, Tax Counsel E. H. Stetson said those publications could fall within the exempt category if they had periodical characteristics: issuance for stated periods of three months or less, regularly and consecutively.

The definitions apparently described publications primarily covering affairs of general interest to the publishing company's employees, dealers, and distributors. That content met a separate requirement that the publication not be exclusively advertising. The letter cites no numbered statute, regulation, ruling, or exemption provision.

Later authority and source limits

A February 5, 2002 official staff email published with Annotation 385.0920 warns that, under then-current section 6362.7 and Regulation 1590, periodicals were no longer exempt unless sold by subscription and delivered by mail or common carrier, or covered by another exemption such as nonprofit distribution. The live 385.1080 annotation continues to call regularly and consecutively issued house organs tax exempt. The sources do not establish current treatment.

The official 385.1080 PDF does not include the original inquiry, May 15 response, April 14 or April 18 letter, supplied definitions, four publications, titles, issues, publication and delivery schedules, employees, dealers or distributors, general-interest content, advertisements, publisher or printer identity, printing agreement, charges or invoices, distribution, sales or use, returns, exemption documentation, tax calculations or payments, audit, assessment, claim, appeal, or outcome. The organization, counsel, member, company, recipients, transactions, and amounts are redacted or unidentified.

The live annotation preserves only regular, consecutive issuance for stated periods of three months or less and the tax-exempt conclusion. It omits the prior letter and four specific house organs, member-printer fact, two definition letters, average-interval wording, conditional rather than categorical advice, employee/dealer/distributor audience, general-interest content and not-exclusively-advertising condition, absent numbered authority, later 2002 warning, missing records, redactions, and absent outcome.

What this means for you

Employers, dealer networks, internal publishers, and tax professionals

Preserve every publication and issue, schedule, editorial audience and content, advertisements, subscription and delivery terms, printing agreement, invoice, distribution, sale or use, return, exemption record, tax calculation, and payment.

Common questions

Q: What issue interval did counsel describe?

A: Stated periods of three months or less.

Q: Who were the intended readers?

A: Employees, dealers, and distributors of the publishing company.

Q: Why were the publications not treated as advertising-only?

A: They primarily addressed affairs of general interest to those groups.

Q: Did the letter cite the controlling statute or regulation?

A: No. It referred only to the exempt category and stated requirements.

Q: Does the source establish a current exemption?

A: No. Later official staff guidance warns that periodical status alone no longer established exemption under then-current law.

Citations and references

• May 15 response about four specified house organs — copy and publications absent
• April 14 and April 18 letters supplying house-organ definitions — copies and source identity absent
• California Revenue and Taxation Code § 6362.7 and Regulation 1590 — discussed in the February 5, 2002 staff email published with Annotation 385.0920
• Publications, issues, schedules, content, ads, printing and distribution records, transactions, tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Tax Counsel letter:

these publications may be regarded as within the exempt category provided they have the characteristics of a periodical, that is, are issued for stated periods of three months or less and are issued regularly and consecutively.

they deal primarily with affairs of general interest to employees, dealers, and distributors of the company publishing the same, and thus meet the requirement that the publication shall not be an advertising publication exclusively.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.1080
• Original supporting opinion: 385.1080 PDF

Original ruling text

385.1080
STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

May 16, 1950

--- --- --XXXX --- ----- --- X, California
Attention:

Mr. ---. ---. --Accounting and Tax Counsel

Gentlemen:
Yesterday we addressed a letter to you in answer to your inquiry concerning the status of four specified house organs printed by one of your members. We indicated that, in our opinion, these could be regarded as periodicals regularly issued at average intervals not exceeding three months. With reference to your letters of April 18 and April 14 supplying us the definitions of the term “house organ”, it is our view that these publications may be regarded as within the exempt category provided they have the characteristics of a periodical, that is, are issued for stated periods of three months or less and are issued regularly and consecutively. Apparently, from the definitions which you have supplied, they deal primarily with affairs of general interest to employees, dealers, and distributors of the company publishing the same, and thus meet the requirement that the publication shall not be an advertising publication exclusively. Very truly yours,

E. H. Stetson
Tax Counsel
EHS:ph
cc:
Mr. Wm. R. Thomson