Could three one-page quarterly reports and a substantially different 24-page annual report be combined into one exempt periodical series?

Plain-English summary

A redacted corporation asked whether the periodical sales-tax exemption applied to its quarterly and annual reports. The source prints the request date as April 31, 1991, an impossible date that it does not resolve. The enclosed 1990 reports are absent.

The corporation issued three quarterly reports, each a one-page sheet folded in thirds, and one 24-page bound annual report.

Section 6051 applied sales tax to retailer gross receipts from California retail sales of tangible personal property unless specifically exempt. Former section 6362 exempted periodicals regularly issued at average intervals no longer than three months.

The enclosed Regulation 1590 defined periodicals through stated intervals, general-interest information, literary or subject-matter continuity, connected articles, and enough style and format similarity to show a series. It expressly said a corporate annual report substantially different in style and format from quarterly reports was not part of that series.

Tax Counsel Stella Levy concluded that the annual report could not join the quarterly reports because their formats differed substantially.

The three quarterly reports were similar to one another, but by themselves appeared only three times yearly. They failed the minimum frequency of at least four issues a year. The source includes no sales, tax amount, or outcome.

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. The 1991 letter predates that rule and supplies neither condition.

The official PDF does not include the request, enclosed 1990 quarterly or annual report, Regulation 1590 enclosure, report contents or authors, issue or delivery schedules, format comparison beyond the stated page/fold/binding facts, corporation or recipient records, distribution or subscription terms, printer or printing agreement, prices or invoices, retail sales, returns, exemption documentation, tax calculations or payments, audit, assessment, claim, appeal, or outcome. The corporation, requester, recipients, printers, transactions, and amounts are redacted or unidentified.

The source prints the impossible date “April 31, 1991,” begins its section 6362 quotation without a visible closing quotation mark, and prints “style and form at.” The original-text section preserves those forms rather than silently correcting the official record.

The live annotation preserves the three one-page folded quarterly reports, 24-page bound annual report, substantial format difference, nonperiodical conclusion, three-issue frequency failure, and date. Its 2003 note adds section 6362.7's operative date and free-distribution-or-subscription condition. It omits the impossible request date and John Abbott, enclosed reports, sections 6051 and 6362, detailed Regulation 1590 definition and enclosure, missing records, redactions, source forms, and absent outcome.

What this means for you

Corporate publishers and tax professionals

Test each claimed series for frequency, content, continuity, style, and format. Preserve every report and issue, schedules, recipients and delivery, subscriptions, printer agreements, invoices, sales, returns, exemption documentation, tax calculations, and payments.

Common questions

Q: Was the annual report part of the quarterly series?

A: No.

Q: Did the three quarterly reports qualify by themselves?

A: No. Three issues per year were too few.

Q: What date did the request bear?

A: The source prints April 31, 1991, which is impossible; no corrected date is provided.

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

• Former California Revenue and Taxation Code §§ 6051 and 6362
• California Sales and Use Tax Regulation 1590
• California Revenue and Taxation Code § 6362.7, operative November 1, 1992 — 2003 live-annotation note
• April 31 request, enclosed 1990 reports and Regulation 1590, publication and distribution records, printing and sales transactions, tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Tax Counsel letter:

You enclosed the reports for 1990 which consist of three quarterly reports, each of whose format is one page folded in thirds, and one annual report whose format is a 24-page bound booklet.

Each issue must be sufficiently similar in style and format to make it evident that it is one of a series.

The quarterly reports are similar to each other but are not published with the required frequency (at least four times a year) to themselves qualify for the exemption.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.1151
• Original supporting opinion: 385.1151 PDF

Original ruling text

385.1151

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 327.3400

June 11, 1991

Mr. T--- H. W---, Jr.
D---’s G--- I--- C---, Inc.
XXXX --- Avenue
---, California XXXXX-XXXX
Re:

D---’s G--- I--- C---, Inc.
FR -- XX-XXXXXX

Dear Mr. W---:
I have been asked to respond to your April 31, 1991 letter to John Abbott requesting legal advice as to whether the sales tax exemption for periodicals is applicable to D---’s G--- I--- C---’s quarterly and annual reports. You enclosed the reports for 1990 which consist of three quarterly reports, each of whose format is one page folded in thirds, and one annual report whose format is a 24-page bound booklet. Except where specifically exempted by statute, sales tax applies to the gross receipts of retailers from all retail sales of tangible personal property in this state. (Rev. & Tax. Code § 6051.) Under Revenue and Taxation Code § 6362, sales of periodicals “regularly issued at average intervals not exceeding three months are exempt from sales tax. Sales and Use Tax Regulation Section 1590 (enclosed) defines “periodicals” as: “. . . .those publications which appear at stated intervals, each issue of which contains news or information of general interest to the public, or to some particular organization or group of persons. 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. Each issue must be sufficiently similar in style and format to make it evident that it is one of a series. An annual report of a corporation which is substantially different in style and form at from the corporation’s quarterly report is not part of a series with the quarterly reports . . . ”

Mr. T--- H. W---, Jr.

-2-

June 11, 1991
385.1151

Under the above-quoted regulation, D---’s reports do not qualify for the periodical exemption because the quarterly reports are substantially different in format from the annual report. The quarterly reports are similar to each other but are not published with the required frequency (at least four times a year) to themselves qualify for the exemption. Please feel free to contact us again if you have further questions. Sincerely,

Stella Levy
Tax Counsel

SL:cl
Enclosure