Could quarterly Bible study guides qualify as exempt periodicals when used in classroom instruction?

Plain-English summary

After a May 4, 1976 Board hearing, Headquarters Legal reviewed a redacted religious publisher's petition for redetermination. The memo's subject identifies the hearing as May 4, 1976, but its first sentence prints May 4, 1916. This page preserves and discloses the conflict.

The Board asked staff to compare the petitioner's publications with redacted publications previously held not to be periodicals and taxed prospectively from January 1, 1973. The petitioner said its publications were not textbooks or lesson materials, were like other religious periodicals, were read mainly for leisure rather than in Sunday school, and contained new articles instead of cyclically repeated ones. Counsel later said some publications were not used in classrooms, some were sold to other denominations, and the petitioner already paid tax on other classroom publications.

The memo says the Sacramento account files had been destroyed. Materials received from the Inglewood District Office indicated that the earlier comparison publications repeated 12 quarterly formats, adding some new material when each three-year cycle restarted. Hearing Officer W. E. Burkett's absent decision compared those updates to new editions of textbooks and denied exemption.

The memo also quoted part of Tax Counsel Gary Jugum's absent December 23, 1971 opinion. That opinion had said Bible study guides used in a regular classroom religious-education program did not qualify, but also described the taxpayer as dividing three copyrighted texts into quarterly booklets and reissuing the same material over successive three-year periods.

Headquarters Legal said the cyclical/noncyclical distinction should control. Textbook-like updating and reissuance of a basically cyclical publication remained taxable. Noncyclical quarterly publications made up mainly of new material qualified as periodicals under the former analysis. Classroom use and religious content were not reasons by themselves to deny the classification.

Staff recommended granting the petition for the publications on page 4 of the absent Decision and Recommendation, except the three the petitioner conceded were taxable. The memo then conditionally drafted a “Statement of Board Action” to use if staff's recommendation was approved. The official PDF does not contain a separate final notice. The live annotation publishes the guides' classification rule as the result.

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 1976 memo does not establish current exemption treatment.

The official 385.1350 PDF does not include the petition, publications, page 4 publication list, different-cycle issues, copyrighted texts, December 23, 1971 Jugum opinion, audit papers, Burkett's full Decision and Recommendation, attachments, correspondence, final Board notice, taxpayer or publication identities, distribution or subscription terms, prices or invoices, sales or uses, returns, exemption documentation, tax calculations or payments, assessment, claim, appeal, or later outcome. The petitioner, comparison taxpayer, publications, denominations, transactions, and amounts are redacted or unidentified.

The source prints taxabi1ity, Regulation l590, “cyclical nature of same,” and May 4, 1916 once. The original-text section preserves those forms rather than silently correcting the official record.

The live annotation, marked “Am. M99–1,” preserves the classroom context, cyclical/noncyclical distinction, new-material issue, date, and periodical result. It states the rule as “a significant amount of new material” and adds average publication intervals not exceeding three months. It omits the hearing and petition, 1916/1976 source conflict, prior prospective-tax order, leisure-reading and denomination facts, three conceded publications, destroyed files, Inglewood materials, Burkett and Jugum opinions, textbook rationale details, conditional final-notice language, later 2002 warning, missing records, redactions, and absent outcome.

What this means for you

Religious and educational publishers

Classification turned on whether each issue supplied genuinely new material or repeated a textbook-like instructional cycle. Preserve every issue and cycle, content comparisons, copyright and update records, publication and delivery schedule, classroom and other distribution, subscriptions, contracts, invoices, sales, returns, exemption records, tax calculations, and payments. Periodical classification alone does not establish a present exemption.

Common questions

Q: Did classroom use by itself make the guides taxable?

A: No.

Q: Did religious content affect eligibility?

A: No.

Q: What separated the two groups under the 1976 analysis?

A: Noncyclical quarterly issues made up mainly of new material qualified as periodicals; repeated cycles with textbook-like updates remained taxable.

Q: What did staff recommend?

A: Grant the petition for the page 4 publications except the three conceded taxable.

Q: Does the PDF prove that a final Board notice was issued?

A: No. It supplies conditional notice language to use if the recommendation was approved; the live annotation publishes the classification rule as the result.

Q: Does the live annotation exactly repeat the memo's wording?

A: No. It uses a “significant amount” test and expressly says average intervals must not exceed three months.

Citations and references

• Former California Revenue and Taxation Code § 6362
• California Sales and Use Tax Regulation 1590
• December 23, 1971 Tax Counsel Gary Jugum opinion — quoted in part but not included
• Hearing Officer W. E. Burkett's Decision and Recommendation — quoted in part but not included
• California Revenue and Taxation Code § 6362.7 and Regulation 1590 — discussed in the February 5, 2002 staff email published with Annotation 385.0920
• Petition, audit papers, publications, decisions, attachments, correspondence, transactions, tax records, final notice, and outcome — described or implicated but not documented

Verbatim support

From the official Headquarters Legal memorandum:

In our opinion, the cyclical/noncyclical distinction is proper and should become the rule as to Bible study guides such as Petitioner's publications.

But noncyclical, quarterly publications, basically comprised of all new material, should be considered exempt "periodicals."

A publication being used in conjunction with classroom instructional programs does not hold up as a reason for denying the exemption. The religious nature of the Biblical articles in Petitioner's publications is not, of course, reason for denying the exemption.

Should the recommendation of the staff be approved, notification to the taxpayer of the Board's decision will be as follows:

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.1350
• Original supporting opinion: 385.1350 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Headquarters - Petition Unit (IIKL)

From:

Headquarters - Legal (DJB)

Subject:

Sales and Use Tax Petition for Re-determination
Heard in Sacramento on May 4, 1976

385.1350

Date:

May 28, 1976

This petition was taken under consideration by the Board on May 4, 1916 for further study of the arguments presented to the Board. In particular, the Board requested that the publications sold by Petitioner be compared to the publications before the Board in the petition of --- which were held not to be periodicals and sales of which were ordered taxed prospectively effective January 1, 1973. At the hearing Petitioner contended that the publications in question were not textbooks or lesson material, but were indistinguishable from other religious publications which are classified as exempt “periodicals” within Section 6362 and Regulation l590; that the primary use of the publications is not in Sunday schools, but for leisure reading by members of the congregation; and that the same articles are not republished cyclically or repetitiously, but that each issue contains all new articles. Subsequent to the Board hearing, Petitioner's counsel further informed us that Petitioner concedes the taxabi1ity of --- --- --- but that all other publication listed on page 4 of my Decision and Recommendation are protested; that certain of the publications, such as --- and ---, are not used at all in classroom instruction; that certain of the publications are sold to other religious denominations; and that there are other publications which are admittedly designed for classroom use and on sales of which Petitioner pays sales tax. The Sacramento files on the --- account have been destroyed. The Inglewood District Office sent us the attached material which includes the ---audit papers, Hearing Officer W. E. Burkett's Decision, and Recommendation, and various correspondence. The material substantiates the impression of the Board members that the publications in -- were reissued cyclically with only some new material added to each reissue. The situation appears to be analogous to the issuance of a new edition of a textbook with updated material.

On page 2 of his Decision, Mr. Burkett states that:
"According to the taxpayer's representative the quarterly items are issued in 12 different quarterly formats and are then repeated. When a new cycle is begun, some new material is added to each issue. The extent of the change cannot be ascertained without copies of issues for a different cycle. None of these are currently available." In denying the exemption, Mr. Burkett, on page 3, states that: “While each cycle is said to contain some new material, this is apparently done for the purpose of updating the material. School texts and other teaching aids have been uniformly denied exemption, although they are invariably updated and reprinted.” Tax Counsel Gary Jugum stated in an opinion of December 23, 1971 that the exemption would not apply to Bible study guides and Bible lessons used in a classroom to present a subject matter for study in a regular program of religious education. This, and nothing more, appears to have become the rule applied in the audit, particularly as its application to Petitioner’s publications was verified by legal during the audit. But it is noteworthy that in the same letter Mr. Jugum states that: "Taxpayer --- has segmented three copyrighted texts into quarterly booklet form, and taxpayer reissues the same instructional material quarterly over successive three year periods." On page 6 of my Decision and Recommendation in this matter, I stated that “The cyclical nature of same of the --- material was not the determinative factor in that decision…” The Board members have now made clear that the cyclical nature was the determinative factor, and that we should consider Petitioner's admittedly noncyclical publications as presenting a new question, not foreclosed by ---. In our opinion, the cyclical/noncyclical distinction is proper and should become the rule as to Bible study guides such as Petitioner's publications. The textbook type of updating and reissuance of a basically cyclical publication, as in --- would continue taxable. But noncyclical, quarterly publications, basically comprised of all new material, should be considered exempt "periodicals.” A publication being used in conjunction with classroom instructional programs does not hold up as a reason for denying the exemption. The religious nature of the Biblical articles in Petitioner's publications is not, of course, reason for denying the exemption. Consequently, it is recommended that the petition be granted to the extent of the gross receipts from the sale of the publications listed on page 4 of the Decision and Recommendation, with the exception of the three publications which are conceded. Should the recommendation of the staff be approved, notification to the taxpayer of the Board's decision will be as follows: Statement of Board Action

The Board concluded that the publications in question constituted “periodicals” within Revenue and Taxation Code Section 6362 with the exception of --- --- --- --- The Board ordered that the tax be re-determined accordingly and that the petition to that extent be granted.