Did letters and envelopes printed principally to solicit donations qualify for California's printed-sales-message exemption?

Plain-English summary

The Board had previously told a printer that its sales of letters and envelopes to a community-services customer were exempt under section 6379.5.

After reviewing the original samples again, the Board said that advice was wrong. The letters and envelopes principally solicited donations rather than advertised or promoted goods or services, so they did not qualify for the printed-sales-message exemption.

The correction directed the printer to disregard the October 5, 1988 advice in all future transactions with that customer and others in similar circumstances.

What this means for you

Nonprofits, fundraising printers, direct-mail businesses, and tax professionals

The principal purpose controls. A letter-and-envelope package does not qualify merely because it is mailed broadly or contains persuasive language; fundraising solicitations are different from advertising goods or services.

Common questions

Q: Did the letters and envelopes qualify?

A: No. Their principal purpose was soliciting donations.

Q: Had the Board previously reached the opposite result?

A: Yes. This letter expressly called the earlier advice erroneous and withdrew it for future dealings.

Q: Does the holding cover materials that principally sell goods or services?

A: No. The correction was based on the submitted materials' donation-solicitation purpose.

Citations and references

• California Revenue and Taxation Code § 6379.5

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0063.800
• Original supporting opinion: 432.0063.800 PDF

Original ruling text

432.0063.800

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-8485

March 17, 1989

K--- Z--G--- Graphics & Printing
P.O. Box XXX
---, CA XXXXX
Re:

SR -- XX-XXXXXX

Dear K--- Z---:
On October 5, 1988, we wrote you expressing our opinion that G--- Graphics & Printing’s sales of letters and envelopes to R--- Community Services were exempt pursuant to Revenue and Taxation Code Section 6379.5. Since writing to you, it has come to our attention that the advice given you was erroneous. Upon further review of the materials attached to you original request for opinion of August 9, 1988, we have concluded that the principal purpose of the letters and envelopes in question was to solicit donations, not to advertise or promote goods or services. Our position in this area has consistently been that sales of such materials do not qualify for the section 6379.5 exemption. Accordingly, kindly disregard our prior advice in all future dealings with this customer and others similarly situated. Very truly yours,

E. L. Sorensen, Jr.
Senior Tax Counsel

ELS:jb
cc:

Audit Evaluation and Planning Unit (GEL)