Did a nonprofit newsletter issued four or five times a year qualify as an exempt periodical?

Plain-English summary

Redacted nonprofit agency S's March 25 request asked how sales tax applied to its West Coast office newsletter. The live annotation identifies the American Social Health Association, while the supporting letter does not expose that name.

S received financial support from United Fund/Crusade campaigns in California and nationwide and was registered as CT-4736 with the Attorney General's Registry of Charitable Trusts. It issued the newsletter “four or five times a year” at no charge to a regular mailing list of approximately 2,000 names.

Former section 6362(a) exempted property becoming an ingredient or component of a periodical regularly issued at average intervals no longer than three months. Ruling 50 defined periodicals as publications appearing at stated intervals with general-interest news or information, literary or subject-matter continuity, and a connection among issues' articles.

Based on a reviewed but absent January 1970 issue, Assistant Tax Counsel Gary J. Jugum found that the newsletter's subject matter qualified. The scheduling evidence did not: saying only “four or five times a year” did not establish stated intervals.

On the information before him, Jugum concluded that S's newsletter did not qualify under section 6362(a) and Ruling 50. No later schedule, tax amount, or outcome appears.

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 1970 letter does not address that later regime.

The official 385.1300 PDF does not include the March 25 request, January 1970 issue, any other newsletter or issue, article or author records, issue or delivery schedule, United Fund/Crusade or Registry documents, mailing list or recipients, publication or printing agreement, charges or invoices, distribution, sales or use, returns, exemption documentation, tax calculations or payments, audit, assessment, claim, appeal, Ruling 50 enclosure, or outcome. S, its publisher, recipients, printers, transactions, and amounts are redacted or unidentified beyond the stated registration and approximate mailing-list count.

The source says “regular set mailing list” and “the nature of the article” in the singular. The original-text section preserves those forms rather than silently correcting the official record.

The live annotation preserves the nonprofit status, four-or-five-times-yearly schedule, periodical subject characterization, unstated-interval problem, nonexempt conclusion, and date. It adds the American Social Health Association name. It omits the request and West Coast office, United Fund/Crusade funding, CT-4736 registration, no-charge and approximately 2,000-name distribution, section 6362(a), full Ruling 50 test and enclosure, January 1970 sample and subject-matter finding, information-before-counsel limit, later 2002 warning, missing records, redactions, and absent outcome.

What this means for you

Nonprofit publishers and tax professionals

Nonprofit status, free distribution, and qualifying content do not replace a stated schedule. Preserve every newsletter and issue, publication and delivery calendar, funding and registration records, articles, authors, mailing lists and recipients, printing agreements, invoices, distribution, returns, exemption records, tax calculations, and payments.

Common questions

Q: Did the newsletter's subject matter qualify?

A: Yes, based on the January 1970 issue reviewed.

Q: Why was the exemption denied?

A: The association said only that it published four or five times a year, not at stated intervals.

Q: Was the newsletter sold?

A: No. It was distributed without charge to a regular mailing list.

Q: Did counsel reject the newsletter's subject matter?

A: No. The January issue qualified on subject matter; the failure was lack of stated publication intervals.

Q: Did the supporting letter identify the American Social Health Association?

A: No. It redacts the agency as S; the live annotation supplies the name.

Citations and references

• Former California Revenue and Taxation Code § 6362(a)
• Former California Sales Tax Ruling 50, Newspapers and Periodicals
• California Revenue and Taxation Code § 6362.7 and Regulation 1590 — discussed in the February 5, 2002 staff email published with Annotation 385.0920
• Request, sample and other issues, schedules, mailing list, distribution, printing and tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Assistant Tax Counsel letter:

NEWSLETTER is published "four or five times a year" on a no-charge basis. NEWSLETTER is mailed to a regular set mailing list of approximately 2,000 names.

While it is our opinion, based upon a review of the issue dated January 1970, that your newsletter qualifies as a "periodical" at least in regard to the subject matter which appears in it, it seems that the newsletter is not published "at stated intervals", as required by the law.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.1300
• Original supporting opinion: 385.1300 PDF

Original ruling text

385.1300

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
April 2, 1970

Gentlemen:
Your letter of March 25 addressed to Mr. John H. Murray of this office has been referred to the undersigned for reply. You inquire as to the application of the sales tax to the newsletter published by the west coast office of "S". We understand that "S" is a nonprofit agency receiving its financial support from United Fund/Crusade campaigns in communities throughout California and the nation. The "S" is registered as CT-4736 with the Registry of Charitable Trusts of the Office of the Attorney General. NEWSLETTER is published "four or five times a year" on a no-charge basis. NEWSLETTER is mailed to a regular set mailing list of approximately 2,000 names. Section 6362(a) of the Revenue and Taxation Code exempts from the tax the gross receipts from the sale of "tangible personal property which becomes an ingredient or component part of any ... periodical regularly issued at average intervals not exceeding three months and any such ... periodical." "Periodical" is defined in our Ruling 50, Newspapers and Periodicals (copy enclosed), to mean "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." [Emphasis added.] 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 article appearing in them. While it is our opinion, based upon a review of the issue dated January 1970, that your newsletter qualifies as a "periodical" at least in regard to the subject matter which appears in it, it seems that the newsletter is not published "at stated intervals", as required by the law. Rather, the newsletter is published "four or five times a year". Based, then, upon the information before us we can only conclude that the "S" newsletter does not qualify for the exemption provided for by Section 6362(a) and Ruling 50. Very truly yours, Gary J. Jugum Assistant Tax Counsel GJJ:ab [lb]