Were game cards with small sponsor logos and a fine-print reference to a soft-drink prize printed sales messages?

Plain-English summary

A Board district office asked whether cards used in a game sponsored by a soft-drink company and a pizza-restaurant chain qualified as printed sales messages. The attached cards had small sponsor logos, fine-print sponsor references, and a statement that one prize was a soft drink. No other advertising appeared.

The Legal Division said the cards did not consist substantially of printed sales messages. Section 6379.5 required the covered materials to consist substantially of sales messages for goods or services.

The memo compared the cards to calendars carrying an advertisement. Even if the purchaser's subjective purpose was to publicize sponsor names, the physical content still did not satisfy the statutory substantial-message requirement.

What this means for you

Promotion agencies, contest sponsors, printers, and tax professionals

Measure the advertising content of the item itself. Sponsor intent, logos, and incidental prize references do not necessarily make contest materials substantially promotional.

Common questions

Q: Did the sponsor logos make the cards printed sales messages?

A: No. The logos and fine-print references were too limited to make the cards consist substantially of sales messages.

Q: Did the soft-drink prize reference change the result?

A: No. It was only a fine-print reference, and no other advertising appeared.

Q: Did the sponsors' intent to publicize their names control?

A: No. The memo focused on what the cards actually contained.

Citations and references

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

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0050
• Original supporting memorandum: 432.0050 PDF

Original ruling text

State of California

Board of Equalization
Legal Division

Memorandum

To:

Mr. Rick Zahm
Out-of-State Sacramento District Office - OH

From:

Ronald L. Dick
Staff Counsel

Subject:

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

432.0050

Date:

April 6, 1994

This is in reply to your February 10, 1994 Mini-Memo regarding whether game cards qualify as printed sales messages for purposes of Sales and Use Tax Regulation 1541.5. A photocopy of both sides of the game card is attached. The statutory basis for Regulation 1541.5 is Revenue and Taxation Code section 6379.5, which provides: "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." (Emphasis added.) The game cards have only a small X--------- logo and a X--------- logo and, in the fine print, mention X--------- and X--------- and that one of the game prizes is a soft drink. We believe it is clear that the game cards do not consist substantially of printed sales messages. Although game cards are not specifically excluded from the term "printed sales messages" in Regulation 1541.5 at subdivision (a), we believe they are excluded from the term for the same reason as calendars on which are printed an advertisement. Although the purchaser's subjective intent in having the items printed may be to get the sponsor's name publicized, the calendars and game cards do not "consist substantially of printed sales messages" as required by the statute. RLD:plh Attachment – Game Card