Did delivery by a contract carrier, a seller that was itself a carrier, or the seller's own trucks satisfy the printed-message exemption?

Plain-English summary

A law firm asked about four delivery methods for materials assumed to be specially ordered printed sales messages, transferred free to third-party recipients. The opinion also assumed California retail sales and no unmentioned delivery steps.

The Board treated section 6379.5 as specific about transportation. Delivery had to be arranged by the seller through the United States Postal Service or an outside common carrier. A contract carrier alone did not satisfy the requirement.

The result was also taxable when the seller itself qualified as a common carrier and used its own trucks. The Board reasoned that the statutory carrier had to be someone other than the seller or purchaser; otherwise a seller with carrier status would receive a rule the Legislature did not state. The same answer applied when the seller was itself a contract carrier or simply used its own trucks.

What this means for you

Printers, mailers, carriers, and tax professionals

Confirm both carrier classification and independence from the seller and purchaser. Under this opinion, calling a delivery provider a carrier was insufficient when it was only a contract carrier or the seller itself performed the transportation.

Common questions

Q: Did delivery by a contract carrier qualify?

A: No. The opinion said sales tax applied when the seller used only a contract carrier.

Q: What if the seller was licensed or operated as a common carrier?

A: Its own delivery still did not qualify because the required carrier had to be someone other than the seller or purchaser.

Q: What if the seller was itself a contract carrier?

A: The answer was the same: the exemption did not apply.

Q: Could the seller use its own trucks if it was not a carrier?

A: No. Seller-performed delivery did not meet the delivery condition described in the opinion.

Citations and references

• California Revenue and Taxation Code § 6379.5

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0023.675
• Original supporting opinion: 432.0023.675 PDF

Original ruling text

432.0023.675

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District

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

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles

August 4, 1994

GRAY DAVIS
Controller, Sacramento

BURTON W. OLIVER
Executive Director

Mr. P--- T. C--Law Offices of M--- S--XXXX --- Road, Suite XXX
---, CA XXXXX
Dear Mr. C---:
This is in reply to your June 13, 1994 letter regarding the application of sales tax to charges for printed sales messages under various situations. You asked that we assume in each case the printed materials qualify as printed sales messages which are printed to the special order of the purchaser and are received by third party recipients at no cost to the recipients, who become the owners of the printed sales messages. We also assume in each situation you note the sale occurs in California, and there are no other steps in the transaction. Under the first situation you note, the seller delivers the printed sales messages to a contract carrier which delivers them to the third party recipients. Sales tax would apply to the sale. Revenue and Taxation Code section 6379.5 provides the exemption for the sale of printed sales messages: “Printed sales messages for goods and services printed to the special order of the purchaser. There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of catalogs, letters, circulars, brochures, and pamphlets consisting substantially of printed sales messages for goods and services printed to the special order of the purchaser and 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 to any other person at no cost to that person who becomes the owner thereof.”

Mr. P--- T. C---

-2-

August 4, 1994
432.0023.675

The statute is specific. In order for the exemption to apply, the delivery must be by the seller through the United States Postal Service or by common carrier. If the seller does not employ a common carrier at some stage of the delivery but only delivers the printed sales messages by contract carrier, the exemption does not apply. Under the second situation you described, the seller qualifies as a common carrier and uses its own delivery trucks to transport the messages directly to the third party recipients. The statute provides that the delivery must be by the seller by a common carrier; that is, the seller or its agent must arrange delivery by someone other than the seller or the purchaser. The common carrier to which the statute refers cannot be the seller or the purchaser. To conclude otherwise would circumvent the statute. The legislature did not intend for different rules to apply to a seller which happens to be a common carrier. If the legislature had intended such a result it would have so worded the statute. Of course, our answer is the same to your third situation where the seller is a contract carrier and the fourth situation where the seller is neither a common carrier nor a contract carrier and delivers the printed sales messages to the third party recipients in the seller's own trucks. 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:plh
cc:

--- District Administrator - --