Did an Associated Students directory qualify as a printed sales message when 276 of its 708 pages were advertising?

Plain-English summary

Associated Students produced a directory and used an outside carrier to distribute it. Because the requester did not fully describe the transaction, California assumed the requester sold the directory printing to the association and asked whether that retail sale was taxable.

The printed-message regulation excluded directories unless their principal purpose was advertising or promoting goods or services. California used a more-than-half threshold.

The submitted directory contained 432 pages of listings and 276 pages of advertising. Advertising therefore did not exceed 50 percent of the printed area, so the directory was not a printed sales message. On the assumed transaction, sales tax applied to the printer's sale.

What this means for you

Student organizations, directory printers, and tax professionals

Carrier delivery cannot cure a directory that fails the content test. Count actual advertising against the full printed area, and clearly document the seller, purchaser, and distribution transaction before applying the result.

Common questions

Q: How many pages were advertising?

A: 276 pages, compared with 432 pages of directory listings.

Q: Did the directory meet the more-than-half advertising threshold?

A: No. Advertising was less than half of the total printed area.

Q: Did outside-carrier distribution make it exempt?

A: No. The directory first had to qualify as a printed sales message based on content.

Q: Was the transaction description complete?

A: No. The Board expressly assumed the requester sold the printing to the association.

Citations and references

• California Revenue and Taxation Code § 6051
• California Sales and Use Tax Regulation 1541.5(a)(1) and (b)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0031
• Original supporting opinion: 432.0031 PDF

Original ruling text

432.0031

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

WILLIAM M. BENNETT
First District, Kentfield

1020 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

December 8, 1992

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

BURTON W. OLIVER
Executive Director

REDACTED TEXT

REDACTED TEXT
Dear Ms. Lavelle:
This is in reply to your October 15, 1992 letter regarding the taxable status of "The REDACTED TEXT Directory." You explain that the directory is produced by the Associated Students of REDACTED TEXT (Association) and distributed by an outside carrier. We are unable to give you a specific answer without a description of the transaction to which you are referring. We assume that REDACTED TEXT sells the printing of the directory to the Association, and you are asking for the application of sales tax to REDACTED TEXT's charge. Unless a specific exemption applies, sales tax applies to the gross receipts of REDACTED TEXT's retail sale to the Association of the printing of the directory. (Rev. & Tax. Code § 6051.) Enclosed is a copy of Sales and Use Tax Regulation 1541.5, Printed Sales Messages. As provided in subdivision (b) of the regulation, tax does not apply to the sale or use of printed sales messages which are printed to the special order of the purchaser; 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; and received by any other person at no cost to that person who becomes the owner of the printed material. Subdivision (a)(1) of the regulation defines "printed sales messages." The term does not include directories unless they meet the principal purpose of advertising or promoting goods or services. We have taken the position that a directory qualifies as a "printed sales message" if more than one-half of the directory consists of such advertising. You sent a copy of "The REDACTED TEXT Directory" for our review. Four hundred thirty-two of the pages are directory listings, and 276 pages are advertising. Since not more than 50 percent of the printed area is advertising or promoting goods or services, the directory does not qualify as a printed sales message.

REDACTED TEXT

-2-

December 8, 1992
432.0031

Unless there are other circumstances of which we are unaware, sales tax applies to your sale of the directory to the Association in this state. 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
Enc.