Did a 48-page golf-course brochure qualify as a printed sales message when exactly half its pages were advertising?

Plain-English summary

A graphic-design business produced a brochure for a customer and had it delivered directly to a golf course for free distribution to the course and golfers. It described the brochure's principal purpose as promoting goods, services, and advertising.

California nevertheless applied a page-count test to the submitted item. The brochure had 48 pages, including a four-page golf scorecard. Twenty-four pages were advertising and 24 were informational.

Regulation 1541.5 required the principal purpose to be advertising or promoting goods or services, which the opinion translated to more than 50 percent of the brochure. Exactly half was not enough. Because the brochure was not a printed sales message, section 6379.5 did not exempt its sale even though the delivery and free-recipient facts might otherwise have supported other elements.

What this means for you

Designers, printers, brochure publishers, and tax professionals

Measure the submitted publication's actual promotional content. A stated advertising purpose and free distribution do not cure a brochure that fails the more-than-half content threshold used in this opinion.

Common questions

Q: Did exactly 50 percent advertising qualify?

A: No. The opinion required more than 50 percent advertising or promotional content.

Q: Was the four-page scorecard included in the count?

A: Yes. It was included within the brochure's 48 total pages.

Q: Did free delivery to the golf course and golfers make the sale exempt?

A: No. The brochure first had to qualify as a printed sales message, and it failed that requirement.

Citations and references

• California Revenue and Taxation Code §§ 6051, 6091, 6201, 6204, and 6379.5
• California Sales and Use Tax Regulations 1541.5 and 1667(a)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0012.875
• Original supporting opinion: 432.0012.875 PDF

Original ruling text

432.0012.875

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District, Kentfield

450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-3828

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR
Third District, San Diego

November 2, 1993

MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento

X------------------------

BURTON W. OLIVER
Executive Director

Dear X---------------------,
Re: X----------------------This is in response to your letter dated August 19, 1993, in which you ask whether your enclosed brochure qualifies for a sales tax exemption. You state: “X------------------ a graphic design business. One of our customers has asked us to produce this brochure. Its principal purpose is the promotion of goods, services and advertising. "After the brochure is printed, it is delivered directly to the golf course for distributing. It is free to both the golf course and the end user (the golfer)." Retail sales of tangible personal property in California are subject to sales tax. When sales tax does not apply, use tax applies to the use of property purchased from a retailer for use in California. (Rev. & Tax. Code §§ 6051, 6201, 6204.) Therefore, unless the contrary is established, tax applies to the sales of the brochures. (Rev. & Tax. Code § 6091, Reg. 1667 (a) . ) You are correct that Revenue and Taxation Code section 6379.5 provides an exemption for certain sales of brochures, circulars, catalogs, and pamphlets consisting substantially of printed sales messages. If your brochure is a printed sales message, certain provisions must be satisfied in order for the printed sales message exemption to apply. Those requirements are explained in Regulation 1541.5(b) as follows: “[T]ax does not apply to the sale 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 becomes the owner of the printed material.” In order for the brochure to qualify as a printed sales message, it must be for the principal purpose of advertising or promoting goods or services. (Reg. 1541.5(a) (1).) In other words, more than 50 percent of the brochure must be for the purpose of advertising or promoting goods or services. The

brochure you provided consists of 48 pages, which include the four page scorecard. Of those 48 pages, 24 consist of advertising and the remaining 24 pages are informational. Since the brochure does not consist of over 50 percent advertising, it is our opinion the brochure is not for the principal purpose of advertising and therefore does not qualify as a printed sales message within the meaning of subdivision (a) (1) of Regulation 1541.5. Since the brochure is not a printed sales message, the exemption provided by Section 6379.5 does not apply. If we can answer any further questions, please feel free to contact us. Sincerely,

Rachel M. Aragon
Staff Counsel
RMA:jlh

BOE-1137 REV. 11 (7-02)