Did a single-sheet magazine reply envelope and order form qualify as a printed sales message when most of the document promoted subscriptions?

Plain-English summary

A single sheet combined a postage-paid reply envelope and magazine order form. About two-thirds of the sheet was folded and glued into the envelope. The remaining third was an order form: one side promoted subscription benefits, and the reverse let a customer use stickers to accept a free issue and begin a subscription.

Regulation 1541.5 generally taxed separate reply envelopes and order forms, but treated them as part of a printed sales message when physically affixed and sold as an integral document. It separately taxed reply envelopes used primarily to collect bill payments or serve other nonpromotional business purposes.

This document principally promoted magazine subscriptions. The envelope secured an order rather than a billing payment, and the printed sales message plus reply envelope occupied five-sixths of the document. Taken as a whole, it qualified as a printed sales message.

The official PDF has conflicting dates. Its formal first page says March 4, 1993, while the second-page footer and annotation metadata say May 7, 1992. This page uses the formal first-page date and preserves the conflict in the disclaimer.

What this means for you

Subscription marketers, printers, and tax professionals

Evaluate an integrated mail piece as a whole: physical attachment, proportional area, and whether the reply device promotes a sale or primarily collects an existing payment all matter.

Common questions

Q: Were reply envelopes always taxable?

A: No. They could be integrated into a qualifying printed sales message under Regulation 1541.5(b)(8).

Q: Why did this document qualify?

A: Most of it promoted and enabled a magazine subscription, and the envelope and order form were one integrated sheet.

Q: What kind of reply envelope would remain taxable?

A: One used primarily to collect a bill payment or for another purpose unrelated to promoting goods or services.

Q: What date appears on the source?

A: March 4, 1993 on the formal first page and May 7, 1992 on the second-page footer.

Citations and references

• California Sales and Use Tax Regulation 1541.5(a)(1), (b)(8), and (b)(9)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0090
• Original supporting opinion: 432.0090 PDF

Original ruling text

432.0090
STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001
TELEPHONE (916) 445-6450

March 4, 1993

Mr. R--- E. W--Law Offices of
K---, M--- & U--XXXX --- --- Avenue, Suite XXX
---, CA XXXXX
Dear Mr. W---:
This is in reply to your March 24, 1992 letter regarding the application of sales tax to sales of printed sales messages. You note the following facts: “The subject of this request for information is commonly described as a ‘reply envelope/order form attached.’ The envelope and order form is a single sheet of paper. Approximately 2/3 of the sheet of paper has been folded and glued to make a postage-paid reply envelope. The remaining 1/3 of the sheet of paper comprises the order form and is separated from the envelope portion by a light perforation line and a printed perforation line. One side of the order form is fully devoted to a printed sales message promoting the benefits of subscribing to a magazine. The reverse side of the order form contains spaces on which the customer can affix stickers to indicate acceptance of one free issue of the magazine and to start a subscription to the magazine.” Given this information, you asked whether the printed matter qualifies as a printed sales message as defined in Sales and Use Tax Regulation 1541.5. The regulation defines the term “printed sales messages” at subdivision (a)(1): “‘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

Mr. R--- E. W---

-2-

May 7, 1992
432.0090

invoices, containers for sample merchandise, newspapers, cash register tapes, or directories unless they meet the principal purpose of advertising or promoting goods or services.” Reply envelopes are covered at two places in subdivision (b). Subdivision (b)(8) provides that tax generally applies to sales of reply envelopes even though the purchaser may subsequently deliver the property to a printer for insertion into a printed sales message; however, reply envelopes and order forms will be considered part of a printed sales message when stapled, glued, or otherwise affixed to the printed sales message to become an integral part of the printed sales message and sold together with the printed sales message. Subdivision (b)(9) provides that tax applies to sales of reply envelopes to which printed sales messages are attached when the reply envelopes are provided for the primary purpose of securing a return payment on a billing or business reasons other than the promotion of goods or services. As you note in your correspondence, the reply envelope to which you refer is provided for the primary purpose of promoting the sale of magazine subscriptions rather than to secure a return payment on a billing or other business purposes. Given that the reply envelope is for the purpose of securing an order, and the printed sales message and reply envelope comprise fivesixths of the printed document, we believe that, taken as a whole, the document was printed for the principal purpose of promoting the sale of the magazines and qualifies as a printed sales message. We hope this answers your questions; however, if you need further information, feel free to write again. Very truly yours,

Ronald L. Dick
Senior Tax Counsel
RLD:sr