Did a radio-station newsletter promoting events, disc jockeys, prizes, and listener response qualify as a printed sales message?
Apply this to your situation
This page answers the general question as of 1998. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
A printer delivered a radio station's newsletter to a third-party mailing house for distribution to an existing database. The newsletter promoted station events, disc jockeys, and listener prizes and included a response mechanism for becoming a loyal listener.
The 1991 opinion concluded that the newsletter qualified as a printed sales message if recipients received it free. The printer's sales were exempt when it delivered the newsletters to the mailing house for mailing, subject to the regulation's required supporting documentation and other conditions.
The official PDF incorporates an April 23, 1998 staff note saying the original letter lacked the analysis needed to reach that conclusion, although the conclusion was probably correct. The note reasoned that Regulation 1541.5(a)(1) covered advertising or promoting goods and services, which could support qualification because the newsletter promoted the station's services even though it did not promote the sale of listening to the radio.
Because that later note supplies the controlling published rationale, this page uses the 1998 date while preserving the original 1991 opinion below.
What this means for you
Broadcasters, newsletter printers, and tax professionals
Promoting a free service can potentially satisfy the promotional-content test, but content alone is not enough. Confirm special-order printing, free receipt, compliant mailing-house delivery, and the required exemption documentation.
Common questions
Q: Did the listener response mechanism disqualify the newsletter?
A: No. The opinion still treated the newsletter as a printed sales message.
Q: Was free receipt important?
A: Yes. The opinion expressly assumed the recipients received the newsletter free of charge.
Q: Did later staff fully endorse the original analysis?
A: No. The 1998 note said the analysis was lacking but regarded the conclusion as probably correct and supplied a regulatory rationale.
Citations and references
- California Revenue and Taxation Code §§ 6051 and 6201
- California Revenue and Taxation Code § 6379.5
- California Sales and Use Tax Regulation 1541.5(a)(1) and (b)(1)-(3)
Source
- Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
- Annotation page: Annotation 432.0082
- Original opinion with incorporated 1998 note: 432.0082 PDF
Original ruling text
432.0082
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-8485
May 31, 1991
--Re:
Dear --:
This is in response to your letter of January 17, 1991, requesting our opinion as to whether the above-referenced newsletter is exempt from sales and use tax. Facts You described the facts as follows: “We deliver the newsletter to a 3rd party (mailing house) and they then send it out to an existing data base file. “The newsletter promotes the station’s events, disc jockeys and prizes one can win by becoming a loyal listener. The newsletter contains a response mechanism to enable one to become a loyal listener. The station has a dollar value for every loyal listener it obtains.” Sales and Use Tax - General Discussion Except to the extent specifically excluded or exempted by statute, the Sales and Use Tax Law, California Revenue and Taxation Code (Section 6001 et seq.) imposes sales or use tax on the gross receipts from the retail sale of all tangible personal property sold or purchased for use in this state. (Sections 6051 and 6201). (All statutory citations are to the California Revenue and Taxation Code, unless otherwise noted herein.) Printed Sales Messages Section 6379.5 provides: Printed sales messages for goods and services printed to the special order of the purchaser. 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,
--
-2-
May 31, 1991
432.0082
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. Additionally, Sales and Use Tax Regulation 1541.5(b) provides in relevant part: (b) APPLICATION OF TAX. Operative January 1, 1987, 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... We assume that the recipients of the newsletter receive them free of charge. If so, then it is our opinion that the --- newsletter qualifies as a printed sales message under the foregoing statute and regulation. Your sales are therefore exempt from sales and use tax when you deliver them to a mailing house for mailing to the radio station’s data base of recipients. A copy of the entire regulation is enclosed for your convenience. Please note that it describes the supporting documentation which is required in order to claim this exemption. If you have any further questions, please do not hesitate to write to us again. Cordially, Victoria Lani Arena Tax Counsel
NOTES:
This annotation is wholly lacking in the analysis necessary to reach its conclusion, although the conclusion is probably correct. Looking only at the statute, these don’t seem to qualify because they don’t appear to be for the sale of services (i.e., for the sale of listening to the radio.) However Reg. 1541.5(a)(1) defines printed sales messages to include advertising or promoting goods and services. While the examples are for the sale of goods and services, the wording at least arguably supports this conclusion since the newsletters “promote” the station’s services, even if not promoting the sale of the service. This letter should have included more analysis. Now it does. DHL
4/23/98
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