Did an 80- to 85-minute quarterly sport-aviation video magazine qualify for California's former periodical exemption?

Plain-English summary

A redacted producer's November 30, 1990 letter asked whether Out of the Blue qualified for the newspaper and periodical exemption. The 80- to 85-minute quarterly sport-aviation video magazine went to paid subscribers every three months. Each issue used a similar format with aircraft and product reviews, a famous aviation columnist, airport profiles, and about five minutes of advertising.

California said a video magazine could not qualify for the former periodical exemption. Although the production resembled a periodical in schedule and editorial structure, its videotape format controlled.

Section 6051 imposed sales tax on retailers' receipts from California retail sales, while Civil Code section 1656.1 allowed retailer reimbursement from consumers. The opinion relied on the Legislature's distinct treatment of private-use videotape rentals as taxable sales under section 6006(g)(7), effective September 1, 1983, where viewers received no license, broadcast, exhibition, or reproduction rights. Counsel said the Board had treated outright videotape sales as taxable since at least 1986.

The producer had no seller's permit in Board records and was directed to obtain one from the San Francisco district office.

Source and live-annotation limits

The official 385.1835 PDF does not include the November 30 request, any video or issue, aircraft or product review, columnist segment, airport profile or advertisement, publication or delivery schedule, producer or subscriber identity, subscription agreement or payment, seller's-permit application or issuance, license or other rights, prices or invoices, sales, rentals, leases or uses, returns, exemption documentation, tax calculations or payments, audit, assessment, claim, appeal, or later outcome. The producer, subscribers, products, transactions, and amounts are redacted or unidentified.

The source prints November '30, opens the quoted title as ·Out of the Blue", and says “specifically excluded of exempted.” The original-text section preserves those forms. The live annotation preserves the quarterly sport-aviation format, named content, approximate runtime and advertising, paid subscribers, video-versus-paper comparison, separate-tangible-property rationale, determinative medium, date, and taxable result. It omits the request, no-permit status, sections 6051, 6006(g)(7), and 6362(a), Civil Code section 1656.1, retailer/reimbursement rule, September 1983 effective date, private-use rights test, Board position since 1986, San Francisco permit instruction, missing records, redactions, source forms, and absent outcome.

What this means for you

Video publishers and tax professionals

Do not assume recurring editorial content receives print-periodical treatment. Identify the physical or digital medium and every transferred right, and preserve each issue and content item, publication and delivery schedule, subscriptions, seller's permit, contracts, invoices and sales, rentals or leases, returns, tax calculations, and payments.

Common questions

Q: Did quarterly issuance establish exemption?

A: No.

Q: Did the magazine-like editorial format control?

A: No. Its video format controlled.

Q: Were subscription videotape sales taxable?

A: Yes, under the opinion's historical analysis.

Q: What video transaction did the statute expressly address?

A: A private-use rental or lease where the viewer received no right to license, broadcast, exhibit, or reproduce the tape.

Q: Did the producer have a seller's permit?

A: Not according to Board records; counsel directed the producer to obtain one.

Citations and references

• Former California Revenue and Taxation Code §§ 6006(g)(7), 6051, and 6362(a)
• California Civil Code § 1656.1
• November 30 request, video issues and content, subscriptions, seller's permit, sales, tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Tax Counsel opinion:

Although in many respects, it may appear as though your production satisfies the requirements of an exempt periodical, it is still a video and it is its characterization as a video which is determinative.

For these reasons, it is our opinion that a video magazine cannot be considered an exempt periodical regardless of whether or not in all other respects it appears to meet the requirements of the exemption.

Our records do not indicate that you have a seller's permit. You will need to contact your local district office in order to obtain one.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.1835
• Original supporting opinion: 385.1835 PDF

Original ruling text

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
TELEPHONE (916) 445 - 3956

WILLIAM M. BENNETT
First District, Kentfield
BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR
Third District, San Diego
Matthew K. Fong
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento

Burton W. Oliver
Executive Director

May 31, 1991

Re:

"Out of the Blue"
(No permit number)

Dear
This is in response to your letter of November '30, 1990, in which you inquired as to whether your production, "Out of the Blue", would qualify under the sales and use tax exemption for newspapers and periodicals. Facts You describe your production as follows:
--- produces a quarterly video magazine for sport aviation called ·Out of the Blue". Each issue contains a similar format which includes aircraft and product reviews, a famous aviation columnist, airport profiles and about five minutes of advertising. The entire video is approximately 80 to 85 minutes in length. The video magazine is sent out every three months to paid subscribers. The only differences between "Out of the Blue" and a 'regular' magazine is that "Out of the Blue" is on video not paper and it is issued quarterly, not monthly. Sales and Use Tax - General Discussion Except to the extent specifically excluded of exempted by statute, the California Revenue and Taxation Code imposes an excise tax in connection with the retail sale of all tangible personal property sold or purchased for use in this state. (All statutory citations are to the California Revenue and Taxation Code, unless otherwise noted herein.) Section 6051 imposes

sales tax on the gross receipts from the retail sale of all tangible personal property sold in this state. The sales tax is imposed upon the retailer. California Civil Code Section 1656.1 allows the retailer to collect sales tax reimbursement from the consumer. Opinion The Board of Equalization has consistently taken the position that video magazines fall outside the periodicals exemption contained in Section 6362(a), and are therefore, taxable under the California Sales and Use Tax Law. This position is based upon the fact that the legislature has elected to treat videos as a separate and distinct form of tangible personal property, the sale of which is generally taxable. For example, Section 6006(g)(7) (effective 9-1-83) treats the rental or lease of a video tape for private use where the viewer does not obtain the right to license, broadcast, exhibit or reproduce the video tape as a taxable sale. There was no contemplation at the time this provision was enacted, that any rentals of video tapes would be exempt. In light of this, since at least 1986, it has been our position that outright sales of video tapes are taxable as well. Although in many respects, it may appear as though your production satisfies the requirements of an exempt periodical, it is still a video and it is its characterization as a video which is determinative. For these reasons, it is our opinion that a video magazine cannot be considered an exempt periodical regardless of whether or not in all other respects it appears to meet the requirements of the exemption. Our records do not indicate that you have a seller's permit. You will need to contact your local district office in order to obtain one. The address and telephone number of the San Francisco office is: State Board of Equalization 50 Fremont Street, Suite 1400, San Francisco, CA 94105-2234, Telephone: (415) 396-9800 If you have any further questions, please do not hesitate to write to us again.

Cordially,

Victoria Lani Arena
Tax Counsel

VLA: