Was a medical center's physician handbook a printed sales message when it sought referrals but functioned as a department and physician reference guide?

Plain-English summary

A medical center submitted a physician handbook and said it advertised the center's services to community physicians to attract patient referrals. Its table of contents listed departments; sections described departments and listed physicians and telephone numbers; and an alphabetical physician index appeared at the end.

California classified the handbook as a directory and reference guide rather than a printed sales message. Regulation 1541.5 limited the exemption to specified printed forms principally advertising or promoting goods or services, and directories qualified only when they met that principal-purpose test.

Despite the medical center's stated referral goal, the submitted handbook's actual content functioned as a guide to services and physicians. It therefore did not qualify.

What this means for you

Medical centers, referral networks, publishers, and tax professionals

Stated marketing intent does not control by itself. Review the publication's actual organization and content to determine whether it primarily promotes services or serves as a neutral directory and reference tool.

Common questions

Q: Did the medical center say the handbook sought referrals?

A: Yes. It described the handbook as advertising services to community physicians to attract patient referrals.

Q: Why did the Board still reject qualification?

A: The submitted handbook functioned as a departmental and physician directory and reference guide.

Q: What content supported the directory classification?

A: Department descriptions, physician names and phone numbers, and an alphabetical physician index.

Citations and references

• California Sales and Use Tax Regulation 1541.5(a)(1)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0600
• Original supporting opinion: 432.0600 PDF

Original ruling text

432.0600

STATE OF CALIFORNIA

WILLIAM M. BENNETT
First District, Kentfield

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-5550

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS

Controller, Sacramento

November 19, 1992

────────
BURTON W. OLIVER

Executive Director

Mr. D--- B----- Medical Center
Marketing and Planning
XXXXX --- Avenue
--- ---, CA XXXXX-XXXX

Re:

SR -- XX-XXXXXX
SR -- XX-XXXXXX

Dear Mr. B---:
This is in response to your letter dated September 22, 1992. You included a copy of a "Physician's Handbook" and you ask whether this handbook qualifies as a printed sales message under Regulation 1541.5. You state that the handbook advertises --- Medical Center's services to community physicians for the purpose of attracting patient referrals. The table of contents of the handbook lists your various departments. The sections of the handbook describe the departments and list physicians and telephone numbers. There is also an alphabetical index of physicians. As defined in subdivision (a)(1) of Regulation 1541.5, "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 does not include fund-raising materials, stationery, newspapers or periodicals, notepads, or directories unless they meet the principal purpose of advertising or promoting goods or services. We believe that your handbook is a directory that is a reference guide of your services and physicians, and is not a printed sales message within the meaning of Regulation 1541.5.

Mr. D--- B---

-2-

If you have further questions, feel free to write again.
Sincerely,

David H. Levine
Senior Tax Counsel
DHL:cl

November 19, 1992
432.0600