Did a free chamber telephone directory combining white pages, yellow-page ads, color ads, and coupons qualify as a printed sales message?

Plain-English summary

A chamber of commerce bought a directory combining white pages and yellow pages in one volume, plus center color-ad pages and coupon pages. The directories would be distributed free, potentially by common carrier or a nonprofit organization.

The Board treated ordinary white pages—single-line alphabetical listings of names, addresses, and phone numbers—as nonpromotional. Yellow pages containing advertising blocks, center color-ad pages, and coupon pages were printed sales messages.

Looking at the publication as a whole, the Board found its principal purpose promotional because the yellow pages, color ads, and coupons substantially outnumbered the white pages. Recipients also paid nothing and became owners.

The exemption remained conditional on delivery. The seller, its agent, or a mailing house had to use the United States Postal Service or a common carrier. The opinion defined a common carrier as a person transporting property for compensation and offering service indiscriminately to the public or part of it; it did not establish that the proposed nonprofit distributor met that definition.

What this means for you

Directory publishers, chambers, printers, distributors, and tax professionals

Measure the publication's promotional and nonpromotional components, then document the delivery provider's status. Free distribution and substantial advertising were not enough without the required Postal Service or common-carrier route.

Common questions

Q: Were white pages printed sales messages?

A: No. The opinion treated basic alphabetical contact listings as nonpromotional.

Q: Which sections were printed sales messages?

A: Yellow-page advertising blocks, center color-ad pages, and coupon pages.

Q: Why did the entire directory qualify?

A: Those promotional sections substantially outnumbered the white pages, making advertising the principal purpose.

Q: Could any nonprofit organization deliver the directories?

A: The opinion did not say so. It required Postal Service or common-carrier delivery and did not determine that the proposed nonprofit met the common-carrier definition.

Citations and references

• California Revenue and Taxation Code §§ 6051 and 6379.5
• California Sales and Use Tax Regulation 1541.5(a)(4)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0162
• Original supporting opinion: 432.0162 PDF

Original ruling text

STATE OF CALIFORNIA

432.0162

STATE BOARD OF EQUALIZATION

June 13, 1988

Ms. B--- M--XX --- -----, CA XXXXX
Dear Ms. M---n:
Your letter dated February 18, 1988 to Mr. Gerald Jung of the Oakland district office has been referred to the undersigned for reply. You have requested an opinion as to whether the sale by a California printer to the A--- Chamber of Commerce of the 1987-1988 F--- and M---, N--- & B--telephone directory is exempt from tax as printed sales messages pursuant to Revenue and Taxation Code section 6379.5 and Sales and Use Tax Regulation 1541.5. You state the directory will be delivered by common carrier or a non-profit organization free of charge to those receiving it. Except where the sales are specifically exempted by statute, sale tax applies to the gross receipts of retailers from all retail sales of tangible personal property in this State (Rev. & Tax. Code § 6051). Section 6379.5 of the Revenue and Taxation Code provides an exemption from tax for the sales, storage, use, or other consumption in this State of catalogs, letters, circulars, brochures, and pamphlets consisting substantially of printed sales messages for goods and services. To qualify for the exemption, the printed sales messages must be: (1) Printed to the special order of the purchaser for the principal purpose of advertising or promoting goods or services. (2) Mailed or delivered by the seller of the printed material, the seller’s agent or by a mailing house acting as the agent of the purchaser through the United States Postal Service or by common carrier. (3) Received by any person, other than the purchaser or purchaser’s agent, at no cost to that person who becomes the owner of the printed material.

Ms. B--- M---

-2-

June 13, 1988
432.0162

You indicated that the directory has both “white” and “yellow” pages bound in the same volume. Generally speaking, our experience has been that the term “white pages” means and includes those which alphabetically list names, addresses and phone numbers in a single line. On the other hand, “yellow pages” generally mean those which contain blocks of advertising. Our interpretation has led us to conclude that “white pages” are not printed sales messages while “yellow pages” are printed sales messages. In addition, your directory also features center ad color pages and coupon pages. It is our opinion that the center ad color pages and coupon pages are printed sales messages. You stated in your letter the possibility that a non-profit organization may distribute the directories. As noted above, either the United States Postal Service or a common carrier should be utilized for delivery if the directories are to be considered printed sales messages. Regulation 1541.5(a)(4) defines common carrier as “any person engaged in the business of transporting property for hire or compensation and who offers his services indiscriminately to the public or to some portion of the public.” It is our opinion that the principal purpose of the directories is to advertise or promote goods or services. This conclusion is based on the substantial quantity of “yellow pages”, center ad color pages, and coupon pages which outnumber the “white pages”. In addition, the recipient of the directory receives it at no charge and becomes the owner thereof. However, the exemption from tax for the sale of the directory is conditional. Provided the United States Postal Service or a common carrier, as defined above, are used by the seller, the seller’s agent, or a mailing house to deliver the directories, only then will the sale of the directories be considered exempt from tax as printed sales messages pursuant to Revenue and Taxation Code section 6379.5 and Sales and Use Tax Regulation 1541.5 I’ve enclosed Regulation 1541.5 (Printed Sales Messages) for your information. If you have any further questions, please feel free to write again. Very truly yours,

E. L. Sorensen, Jr.
Senior Tax Counsel

ELS:md
Enclosure