Did a monthly promotional package mailed once to each couple with a newborn qualify as an exempt periodical?

Plain-English summary

An unnamed firm planned Surprise Package as a monthly mailing of 270,000 packages to couples whose babies were born during that month. The firm said it had access to national birth records.

Each envelope would contain a foldout showcase with congratulations and six watercolor reproductions of babies, a congratulatory phonograph record with lullabies, and a folded inner sheet with monthly zodiac information, baby-related editorial material, and free merchandise coupons from baby-product manufacturers. From submitted printed matter, counsel understood the primary purpose to be promoting those manufacturers' products.

Monthly zodiac content would change. For September, the planned inner sheet would identify morning glory as the flower, sapphire as the birthstone, and Virgo for August 24 through September 23.

Although a different package would go out every month, each couple normally would receive it only once during the year. Counsel therefore viewed it from the recipient's perspective as more like a greeting card than a regularly distributed periodical.

Associate Tax Counsel George A. Trigueros concluded that Surprise Package did not qualify for the historical sales-tax exemption under section 6362 and Sales Tax Ruling 50.

Source and live-annotation limits

The official PDF does not include the August 3 conversation, submitted printed matter, Surprise Package or any monthly version, envelope, showcase, paintings, record or lullabies, inner sheet, zodiac or editorial content, coupons or products, manufacturer agreements, birth records or access terms, recipient or distribution data, publication or delivery records, privacy documentation, contracts, prices, invoices, sales or uses, returns, exemption documentation, tax calculations or payments, audit, assessment, claim, appeal, actual launch, or later outcome. The firm, manufacturers, recipients, products, transactions, actual quantities, prices, and tax amounts are unidentified.

The source calls the item a unique publication and says the decision required analysis of legal and administrative precedents but names only section 6362 and Ruling 50. The original-text section preserves the official wording.

The live annotation preserves the title and principal package contents, monthly recipient group, normal one-time distribution, greeting-card characterization, section 6362, date, and nonperiodical result. It omits the conversation and counsel, unnamed firm, planned 270,000 monthly quantity and national birth-record access, six paintings, promotional-purpose understanding, monthly change and September example, Ruling 50 and precedent analysis, missing records, unidentified parties, source wording, and absent outcome.

What this means for you

Direct-mail publishers, advertisers, and tax professionals

A sender-wide monthly schedule did not control when each reader was a one-time recipient. Preserve every package version and tangible component, content changes, recipient-selection and repeat-delivery records, birth-data authority, manufacturer and coupon agreements, promotional materials, contracts, invoices and sales, returns, exemption documents, tax calculations, and payments.

Common questions

Q: How often did the publisher plan to send packages?

A: Monthly, to couples whose babies were born during the current month.

Q: Why was monthly production not enough?

A: Each recipient normally would receive the package only once, so counsel regarded it as greeting-card-like rather than periodic to that reader.

Q: What was the understood primary purpose?

A: Promoting products made by the manufacturers whose coupons appeared inside.

Q: What quantity did the firm plan to send?

A: 270,000 packages each month.

Q: Did the source show an actual mailing or tax outcome?

A: No. It described the plan and classification but included no distribution record or later outcome.

Citations and references

• Former California Revenue and Taxation Code § 6362
• Former California Sales Tax Ruling 50
• August 3 conversation, submitted printed matter, package and contents, birth data, manufacturer and distribution records, sales, tax records, and outcome — described or implicated but not documented

Verbatim support

From the official Associate Tax Counsel opinion:

It is further our understanding that your firm has access to national birth records and plans to send out 270,000 Surprise Packages each month to couples who have had babies born to them during the current month.

Although a different Surprise Package will be sent out each month we do not believe this factor is determinative of the question of whether Surprise Package qualifies as a periodical issued at average intervals of three months or less.

Accordingly, as to the recipient, it will be regarded as in the nature of a greeting card rather than a periodical.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 385.1980
• Original supporting opinion: 385.1980 PDF

Original ruling text

385.1980

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

August 12, 1965

Gentlemen:
This is in regard to our conversation of August 3, 1965 regarding the question of whether your publication, Surprise Package, will qualify as an exempt periodical under Section 6362 of the California Revenue and Taxation Code and sales tax Ruling 50. Surprise Package will consist of an envelope containing a foldout "showcase" sheet. On the showcase will be printed "congratulations" and six reproductions of water color paintings of babies. Within the folded showcase will be a congratulatory record containing lullabies and a folded inner sheet containing zodiacal information relative to the current month, editorial matter pertaining to babies, and free merchandise coupons issued by manufacturers of baby products. It is our understanding from the printed matter which you submitted that the primary purpose of Surprise Package is to promote the sale of the products of the manufacturers whose product coupons are contained in the inner sheet. It is further our understanding that your firm has access to national birth records and plans to send out 270,000 Surprise Packages each month to couples who have had babies born to them during the current month. Each month the Surprise Package will contain different zodiacal information, e.g., in September the inner sheet will indicate that the flower of the month is the morning glory, the birthstone of the month is the sapphire, and the zodiacal sign for the period of August 24 to September 23 is Virgo. As we indicated to you, Surprise Package will be a unique publication and our determination of whether or not it qualifies as a periodical under Section 6362 and Ruling 50 will necessarily be determined by analysis of legal and administrative precedents. Although a different Surprise Package will be sent out each month we do not believe this factor is determinative of the question of whether Surprise Package qualifies as a periodical issued at average intervals of three months or less. We have regarded as periodicals publications containing information of general interest which are printed and distributed to people on a regular basis. It appears to us that, since each month's Surprise Package will be distributed to couples which have had babies during that month, it will normally only be distributed to a couple

once during the year. Accordingly, as to the recipient, it will be regarded as in the nature of a greeting card rather than a periodical. In view of the foregoing considerations, we do not believe that Surprise Package can properly be characterized as a periodical within the meaning of Section 6362 and Ruling 50. Accordingly, we regret to inform you that Surprise Package does not qualify for exemption from sales tax as a periodical.

Very truly yours,

George A. Trigueros
Associate Tax Counsel

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