Did a health-plan directory of contracted providers qualify as a printed sales message when users relied on it for network referrals?

Plain-English summary

A Board audit office submitted a 208-page network directory listing the names, addresses, and specialties of medical providers under contract with a health-plan company. Contracted providers and enrollees relied on the directory to make referrals within the network.

California concluded that the directory did not qualify as a printed sales message. The submitted listings supplied information for referrals but did not advertise or promote the sale of goods or services.

CDTFA separately publishes substantially the same May 26, 1993 analysis under Annotation 432.0030. The two official PDFs preserve different redaction and formatting versions of the same underlying directory facts.

What this means for you

Health-plan administrators, provider directories, printers, and tax professionals

Classify directory content by what it does. Neutral network-navigation information can remain informational even though the listed providers offer paid services.

Common questions

Q: How long was the directory?

A: It contained 208 pages.

Q: What did the listings contain?

A: Names, addresses, and specialties of contracted medical providers.

Q: Did the listings promote provider services?

A: No. The memorandum treated them as informational tools for referrals.

Citations and references

• California Revenue and Taxation Code § 6379.5
• California Sales and Use Tax Regulation 1541.5(a)(1)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0032.400
• Original supporting memorandum: 432.0032.400 PDF

Original ruling text

State of California

Board of Equalization
Legal Division

432.0032.400

Memorandum

To

:

Mr. Alfredo Morales
Laguna Hills (EAA - Audit)

From

:

Ronald L. Dick
Senior Tax Counsel

Date:

May 26, 1993

A--- P--- P---, Inc.

Subject :

This is in reply to your April 2, 1993 memorandum regarding the application of sales and use tax to sales of a network directory to A--- P--- P---, Inc. You asked whether the directory qualifies as a "printed sales message" as defined at subdivision (a)(1) of Sales and Use Tax Regulation 1541.5. You sent a copy of the directory for our review. It consists of 208 pages of listings of the name, address, and specialty of medical service providers who have contracted with A---. Ms. P--- T---, Director of Member Services for A---, explained in a February 19, 1993 letter that the contracted providers and the health plan enrollees depend on the directory in making referrals within the network. After reviewing the copy of the directory you sent, we believe that it does not qualify as a "printed sales message." Revenue and Taxation Code section 6379.5 provides the exemption for catalogs, letters, circulars, brochures, and pamphlets consisting substantially of printed sales messages for goods and services. We believe that the directory you sent provides only informational listings. The listings do not advertise or promote the sale of goods or services. If you have further questions regarding this, feel free to write again.

RLD:sr