Does California's printed-sales-message exemption apply when the printer gives the pieces to the purchaser, who immediately takes them to a mailing house?

Plain-English summary

A printer produced specially ordered advertising postcards bearing first-class or bulk-mail indicia. Its customer had been picking up the finished pieces and then taking them to a mailing house for processing and delivery to the U.S. Postal Service.

California said the printer's sale was taxable. Regulation 1541.5(c)(2) allowed an exemption certificate when the seller delivered the property to the mailing house, including a mailing house hired by the purchaser. It did not allow the printer to deliver the pieces to the purchaser and treat the sale as exempt.

The customer's immediate transfer of the postcards to the mailing house did not change the result.

What this means for you

Printers, direct-mail businesses, and tax professionals

Track who takes possession first. On these facts, seller delivery to the mailing house could support exemption, while delivery to the purchaser defeated it even when the purchaser promptly forwarded the same pieces.

Common questions

Q: Did the advertising postcards potentially qualify as printed sales messages?

A: The opinion focused on the delivery condition and assumed the supporting documentation described by the purchaser.

Q: Could the purchaser hire the mailing house?

A: Yes. The mailing house could be one under contract with the purchaser, but the seller still had to deliver the pieces there.

Q: Did immediate delivery from the purchaser to the mailing house cure the problem?

A: No.

Citations and references

• California Sales and Use Tax Regulation 1541.5(c)(2)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0029
• Original supporting opinion: 432.0029 PDF

Original ruling text

432.0029

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:
This is reply to your November 18, 1991 letter regarding the application of sales tax to your sales of printed sales messages. You note the following facts: “Our company prepares ‘Printed Sales Messages’ for our customer (a retailer). The ‘Messages’ specifically are postcards advertising goods for sale by the purchaser. These mailing pieces are ‘printed to the special order’ of the purchaser and have either a first class or bulk mail indicia printed on the pieces to allow delivery by the U. S. Post Office.” “The regulation implies that the purchaser can not take possession of the mailing pieces. Typically the purchaser has used their truck and driver to pick up the finished mailing pieces and has then delivered them to the mailing house for processing and delivery to the U. S. Post Office.” Given this information, you asked whether your sale is exempt from sales tax under Sales and Use Tax Regulation 1541.5, Printed Sales Messages, if the purchaser provides supporting documentation, as described in subdivision (c)(2) of the regulation, that the purchaser delivers the finished mailing pieces directly to the mailing house for processing that meets the requirements for exemption. No, if you deliver the printed sales messages to the purchaser, your sale is subject to sales tax regardless that the purchaser may immediately deliver the property to a mailing house. Subdivision (c)(2) of the regulation provides for an exemption certificate when the seller delivers the property to the mailing house. The mailing house may be one that has contracted with the

REDACTED TEXT

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December 20, 1991
432.0029

purchaser; however, you may not deliver the printed sales messages to the purchaser and consider the sale as exempt. 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