Did the May 1991 Apartment Owners Review qualify as a printed sales message, and how could later editorial content change its California tax treatment?

Plain-English summary

A printer asked whether the May 1991 Apartment Owners Review qualified as a printed sales message. The printer sold the publication to a client and delivered it to a mailing service rather than to the client; recipients received it unsolicited and free through the U.S. Postal Service.

The submitted issue consisted entirely of advertisements plus an article publicizing the client's services. California concluded that this issue qualified as a printed sales message under Regulation 1541.5.

The answer might change for later issues. The May issue said future editions would include articles about financing, taxes, rental management, and market trends. Those issues could become periodicals rather than printed sales messages. Under Regulation 1590, a publication could not qualify as a periodical if advertising and product publicity exceeded 90% of the printed area in more than half of the issues during a 12-month period.

The opinion also addressed a narrow historical transition: if later issues were periodicals, the printer's sales were taxable from July 15 through October 1, 1991, after the former exemption was repealed and before section 6362.7 took effect on October 2. Section 6362.7 then exempted qualifying newspapers and periodicals distributed without charge and regularly issued at average intervals of no more than three months.

What this means for you

Publishers, printers, and tax professionals

Classify each publication from its actual content and delivery. A promotional issue can qualify as a printed sales message, while later editorial development can move the same title into the periodical rules. Historical effective dates in this opinion should not be applied as current law without verification.

Common questions

Q: Did the May 1991 issue qualify as a printed sales message?

A: Yes. Its advertisements and service-publicity article were promotional, and the printer delivered it through a mailing service for free distribution.

Q: Would every later issue automatically qualify the same way?

A: No. Planned articles on financing, taxes, management, and market trends could make later issues periodicals.

Q: Could an advertising-heavy publication be a periodical?

A: Not under the stated Regulation 1590 test if advertising and product publicity exceeded 90% of printed area in more than half of the issues during a 12-month period.

Citations and references

• California Revenue and Taxation Code § 6362.7
• California Sales and Use Tax Regulation 1541.5(a)(1) and (b)
• California Sales and Use Tax Regulation 1590(a)(2)

Companion annotation

This complete official opinion also supports Annotation 385.1316, which publishes the same Apartment Owners Review periodical-versus-printed-sales-message holding under the Newspapers and Periodicals collection. The two pages intentionally share the official 432.0008 source and preserve the same original text.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0008
• Companion annotation page: Annotation 385.1316
• Original supporting opinion: 432.0008 PDF

Original ruling text

432.0008

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-6450

December 20, 1991

REDACTED TEXT

REDACTED TEXT
Dear REDACTED TEXT:
Your July 30, 1991 letter to the Laguna Hills office of the State Board of Equalization has been referred to the legal staff for reply. You asked for confirmation that the publication, “Apartment Owners Review,” which you produce for your client, REDACTED TEXT, qualifies as a printed sales message. You note that the publication “is mailed and delivered directly to the U. S. Post Office by a mailing service to the recipients unsolicited and free of charge.” We understand this to mean that you contract to sell the publication to REDACTED TEXT, and you deliver the publication to the mailing house rather than to REDACTED TEXT. Sales and Use Tax Regulation 1541.5, Printed Sales Messages, provides at subdivision (b), that tax does not apply to the sale or use of printed sales messages which are: “(1) Printed to the special order of the purchaser; (2) Mailed or delivered by the seller, the seller’s agent or a mailing house acting as the agent for the purchaser, through the United States Postal Service or by common carrier; (3) Received by any other person at no cost to that person who become the owner of the printed materials….” You sent a copy of the May 1991 issue of “Apartment Owners Review” for our review. The issue consists exclusively of advertisements and an article which publicizes services provided by REDACTED TEXT. The issue qualifies as a printed sales message for purposes of Regulation 1541.5. Subdivision (a)(1) of Regulation 1541.5 provides that the term “printed sales messages” does not include newspapers or periodicals. The article in the “apartment Owners Review” notes

REDACTED TEXT

-2-

December 20, 1991
432.0008

that future issues would include articles on financing, taxes, rental management and market trends. It appears that issues published subsequent to May 1991 may not qualify as printed sales messages but rather may be periodicals. Sales and Use Tax Regulation 1590, Newspapers and Periodicals, defines “periodical” at subdivision (a)(2). A copy of the regulation is enclosed. Effective July 15, 1991, the exemption from sales and use tax for the sale or use of newspapers and periodicals was repealed. However, effective October 2, 1991, section 6362.7 was added to the Revenue and Taxation Code to exempt from tax the sale and use of newspapers and periodicals that are distributed without charge and regularly issued at average intervals not exceeding three months and any tangible personal property which becomes an ingredient or component part of such newspaper or periodical. Assuming that “Apartment Owners Review” qualifies as a newspaper or periodical rather than a printed sales message as to issues published after May 1991, tax applied to your sales of the publication to REDACTED TEXT during the period July 15, 1991 until October 2, 1991. The term “periodical” does not include shopping guides or other publications of which the advertising portion, including product publicity, exceeds 90 percent of the printed area of the entire issue in more than one-half of the issues during any 12-month period. (Reg. 1590, subd. (a)(2).) If the “Apartment Owners Review” continues to qualify as a “printed sales message” rather than a “periodical,” your sales of the publications continue to be exempt from tax pursuant to Regulation 1541.5 provided you meet the delivery requirements of the regulation. We hope this answers your questions; however, if you need further information, feel free to write again. Very truly yours,

Ronald L. Dick
Senior Tax Counsel
RLD:sr