Did the bimonthly Oceanic Index, which accumulated marine-literature references during the year, qualify as an exempt periodical?

Plain-English summary

A redacted publisher's February 15 letter asked about Oceanic Index and Oceanic Abstracts under former Ruling 50. Oceanic Index appeared every two months, became cumulative at year end, and supplied up-to-date references to current marine-oriented literature. Users paid a $300 annual subscription fee.

The publisher had told its Sales and Accounting Department that category A had no sales-tax liability, while category B was taxable and required a seller's permit. Counsel concurred. The source does not expressly label which title was A or B, but its following explanations treat the Index subscription as nontaxable and the Abstracts as taxable retail sales.

The Index subscription charge was not taxable. The publisher also could buy its printing without tax by giving the printer the certificate described in former Ruling 50.

If the publisher printed the index itself, property becoming a physical component of the publication could be bought without tax, while other production property remained taxable.

The same opinion also treated printing and components for the irregular, bound Oceanic Abstracts as purchases for resale in a publication whose retail sales were taxable. That companion result is separately published by CDTFA under Annotation 385.1820.

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 1967 opinion does not establish current exemption treatment.

The official 385.1800 PDF does not include the February 15 request, Oceanic Index, Oceanic Abstracts, any issue or volume, marine references or abstracts, year-end cumulation, publication or delivery schedules, publisher or users, subscription agreements or payments, category definitions, Sales and Accounting Department records, seller's permit, Ruling 50 enclosure or exemption certificate, printer or printing, component or other production property, contracts, prices or invoices, sales or uses, returns, tax calculations or payments, audit, assessment, claim, appeal, or later outcome. The publisher, users, printer, transactions, and amounts beyond the $300 fee are redacted or unidentified.

The source prints “will be produces.” The original-text section preserves that form. The live annotation preserves the Index's two-month schedule, year-end cumulation, current marine-literature references, date, and exempt-periodical classification. It omits the request, Ruling 50 and enclosure, $300 annual subscription and nontaxable result, category A/B advice, Sales and Accounting Department, exemption certificate and printing, self-printed components and taxable other production property, Oceanic Abstracts companion analysis, later 2002 warning, missing records, redactions, source form, and absent outcome.

What this means for you

Index publishers and tax professionals

Document the fixed publication and delivery schedule, cumulative editorial structure, subscriptions and payments, exemption certificates, and which production inputs physically become part of the publication. Preserve printer contracts, invoices and sales, returns, tax calculations, and payments.

Common questions

Q: How often was Oceanic Index produced?

A: Every two months.

Q: Was the $300 annual subscription taxable?

A: No, under the historical opinion.

Q: Were all production purchases exempt?

A: No. Only printing or property incorporated into the publication received the stated treatment; other production property remained taxable.

Q: Did the opinion also address Oceanic Abstracts?

A: Yes. It treated the bound, irregular Abstracts as taxable retail publications whose printing and components could be bought for resale.

Q: Did the source define categories A and B?

A: No. The following analysis supplies the Index and Abstracts results but does not formally map the labels.

Citations and references

• 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
• February 15 request, publications, Ruling 50 enclosure, subscriptions, printing and production property, sales, tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Tax Counsel opinion:

The subscription charge for the Oceanic Index is not subject to tax.

The purchase of the printing of this publication is also tax exempt and an exemption certificate, as explained in Ruling 50, can be furnished to the printer.

In the event you do your own printing, you could purchase without tax any property becoming an ingredient or component part of the publication, but tax would apply to your purchase of any other property used in producing the publication but not becoming a physical part thereof.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.1800
• Original supporting opinion: 385.1800 PDF

Original ruling text

STATE OF CALIFORNIA

385.1800

STATE BOARD OF EQUALIZATION

February 17, 1967
Dear Mr. ---:
This is in answer to your letter of February 15 concerning the status of two publications, Oceanic Index and Oceanic Abstracts, for sales tax purposes under Ruling 50, Newspapers and Periodicals, copy enclosed. Concerning the Oceanic Index, you state: “The Oceanic Index is produced every two months and is cumulative at the end of each year. It includes up-to-date references to currently published literature that is marine oriented. Users are charged $300.00 per year as an annual subscription fee.” Concerning the Oceanic Abstracts, you state: “The Oceanic Abstracts, State of the Art-Instrumentation, Vol. 1, is our first publication of abstracts and is bound. Similar publications will be produces and offered to the public at irregular intervals.” You state that you have advised your Sales and Accounting Department that there is no sales tax liability under category A, but that under category B, the tax applies and a seller’s permit is required which will be obtained from the Board. We concur in this advice which you have given to your Sales and Accounting Department. By way of further explanation, the subscription charge for the Oceanic Index is not subject to tax. The purchase of the printing of this publication is also tax exempt and an exemption certificate, as explained in Ruling 50, can be furnished to the printer. In the event you do your own printing, you could purchase without tax any property becoming an ingredient or component part of the publication, but tax would apply to your purchase of any other property used in producing the publication but not becoming a physical part thereof. With respect to the Oceanic Abstracts, you can also purchase the printing or components without tax because they are a part of the publication which you sell at retail and on which you will pay tax measured by the retail sales price. Very truly yours,

E. H. Stetson
Tax Counsel