Did a promotional circular remain a printed sales message when its bottom half was an order and service-request form?

Plain-English summary

A Board district office asked whether a LifeHelp circular was an exempt printed sales message or a taxable order form. The circular promoted a kit apparently available free to requesters, and its bottom half was an order or service-request form.

Regulation 1541.5 generally excluded separate order forms unless they independently met the principal-purpose test. It also treated a form as part of a printed sales message when stapled, glued, or otherwise physically integrated and sold with that message.

The Board concluded that the submitted circular's principal purpose was advertising or promoting the kits. The integrated request form did not change that purpose, so the circular qualified as a printed sales message.

The sale was exempt only if the circular was also printed to the purchaser's special order and delivered through the mail or a common carrier as required. The memorandum emphasized that a common carrier had to participate at some stage.

What this means for you

Direct-mail marketers, printers, and tax professionals

An order or response mechanism does not automatically disqualify a promotional circular. Check whether it is physically integrated, whether the whole piece remains principally promotional, and whether every order and delivery condition is documented.

Common questions

Q: Did the request form make the whole circular taxable?

A: No. The overall principal purpose remained advertising or promoting the kits.

Q: When can an order form be part of a printed sales message?

A: When physically affixed so that it becomes an integral component sold with the message.

Q: Was content qualification enough for exemption?

A: No. Special-order printing and compliant mail or common-carrier delivery were also required.

Citations and references

• California Revenue and Taxation Code § 6379.5
• California Sales and Use Tax Regulation 1541.5(a)(1), (b), and (b)(8)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0063.840
• Original supporting memorandum: 432.0063.840 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

To:

G. Jung
Oakland District Office – CH
Compliance Section

From:

Sukhwinder K. Dhanda, Tax Counsel
Legal Division – MIC:82

Subject:

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

432.0063.840

Date:

September 7, 1993

This memorandum is in response to your inquiry as to whether the "LifeHelp, Service Request Card" constitutes an exempt sales message or whether it is taxable as an order form. The LifeHelp circular which you attached to your memo is advertising a kit apparently available free of charge to those who request it. The bottom half is an order/request form. Revenue and Taxation Code section 6379.5 provides an exemption for sales of printed sales messages 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 an agent for the purchaser, through the United States Postal Service or by other common carrier to any other person at no cost to that person who becomes the owner thereof. The relevant terms of the exemption are explained in Regulation 1541.5. Subdivision (a) (1) of Regulation 1541.5 specifically provides that order forms are not printed sales messages unless they meet the principal purpose of advertising or promoting goods or services. The regulation provides that an order form is considered part of the printed sales message when it is stapled, glued, or otherwise physically affixed to the printed sales message in such a manner that it becomes a component or integral part of the printed sales message and is sold together with that message. If it is not physically attached to the printed sales message, an order form is not a printed sales message and its sale is subject to sales or use tax. (Reg. 1541. 5 (b) (8) ). Because of the promotional information contained in the circular, its principal purpose is to advertise/promote the LifeHelp kits. We therefore conclude that the circular qualifies as a printed sales message even though it also contains an order form.

The sale of the circular is exempt as a printed sales message if it is printed to the special order of the purchaser X---------------- and is delivered through mail or common carrier (a common carrier has to involved in some stage of the delivery).

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