Could single-sheet posters promoting motion-picture videocassette rentals qualify as printed sales messages?

Plain-English summary

A seller asked whether posters promoting a specific product, such as a motion picture available at videocassette rental stores, could qualify as printed sales messages.

California reconsidered an earlier opinion that posters did not qualify. It concluded that a poster could be a circular when it consisted of a single sheet of paper, was printed to the purchaser's special order, and principally advertised or promoted goods or services.

The sale was exempt only when the seller also mailed or delivered the posters through the specified Postal Service or common-carrier channels to donees who received and owned them at no cost.

What this means for you

Poster printers, video retailers, and tax professionals

The label "poster" did not control. Check the item's single-sheet form, promotional purpose, special-order status, and final delivery to free recipients.

Common questions

Q: Did California continue its earlier blanket rejection of posters?

A: No. The Board reconsidered that position.

Q: What poster format qualified?

A: A single sheet of paper functioning as a promotional circular.

Q: Was promotional content alone enough?

A: No. Special-order printing and compliant free-recipient delivery were also required.

Citations and references

• California Sales and Use Tax Regulation 1541.5(a) and (b)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0069
• Original supporting opinion: 432.0069 PDF

Original ruling text

432.0069

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-6450

July 16, 1990

Mr. [X]
Vice President
[P]
XXXX --- -----, CA XXXXX
S- -- XX-XXXXXX
Dear Mr. [X]:
This is in reply to your May 18, 1990 letter regarding the application of sales tax to sales of posters. Specifically, you asked whether [P] can consider sales of posters that promote a specific product; e.g., a motion picture at videocassette rental stores, as exempt from sales tax under Sales and Use Tax Regulation 15441.5, Printed Sales Messages. Subdivision (a) of Regulation 1541.5 defines “printed sales messages”: “‘PRINTED SALES MESSAGES’ means and is limited to catalogs, letters, circulars, brochures, and pamphlets printed for the principal purpose of advertising or promoting goods or services. The term includes such items as department store catalogs, brochures advertising automobiles and vacations, circulars advertising professional services, and coupon books. The term does not include campaign literature and other fund-raising materials, stationery, reply envelopes, except as provided for in (b) of this regulation, order forms, sales invoices, containers for sample merchandise, newspapers or periodicals, calendars, notepaids, cash register tapes, or directories unless they meet the principal purpose of advertising or promoting goods or services.”

Mr. [X]

-2-

July 16, 1990
432.0069

Subdivision (b) of the regulation provides that tax does not apply to the sale or use of printed sales messages which are: “(1)

Printed to the special order of the purchaser;

“(2) 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; “(3) Received by any other person at no cost to that person who becomes the owner of the printed material.” You note that this Board previously issued an opinion that posters do not qualify as printed sales messages. However, on further review of the issue, we believe that, posters may qualify when they consist of a single sheet of paper and are printed to the special order of the purchaser for the principal purpose of advertising or promoting goods or services. If such posters are mailed or delivered to the donees in accordance with subdivisions (b)(2) and (3) of the regulation, the sale is exempt. We hope this answers your question; however, if you need further information, feel free to write again. Very truly yours,

Ronald L. Dick
Senior Tax Counsel
RLD:wak