Were circulars asking for charitable donations printed sales messages because the organization would use donations to provide goods and services?

Plain-English summary

A requester asked whether a charitable organization's circulars qualified as printed sales messages. The organization would use donated money to buy goods and services for people in need.

The Board said no. Regulation 1541.5 defined printed sales messages as specified printed materials produced principally to advertise or promote goods or services. It specifically excluded campaign literature and other fundraising materials unless they independently met that principal-purpose test.

These circulars asked for donations. The later use of donated funds to purchase and provide goods or services did not turn the solicitation itself into advertising or promotion. The statutes and regulations therefore did not support the requested exemption.

What this means for you

Charities, printers, fundraising vendors, and tax professionals

Focus on what the printed piece itself principally communicates. A charitable purpose and the organization's later purchase of goods or services do not by themselves make a donation appeal a printed sales message.

Common questions

Q: Did the organization's charitable purpose make the circular exempt?

A: No. The opinion applied the printed-sales-message definition to the circular's content and purpose.

Q: Why did the organization's use of donations not matter?

A: The circular requested donations; it did not advertise or promote the goods or services later supplied to people in need.

Q: Can fundraising material ever be a printed sales message?

A: Only if it independently has the principal purpose of advertising or promoting goods or services under the regulation.

Citations and references

• California Revenue and Taxation Code § 6379.5
• California Sales and Use Tax Regulation 1541.5

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 432.0750
• Original supporting opinion: 432.0750 PDF

Original ruling text

432.0750

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001
TELEPHONE (916) 920 - 7445

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

April 15, 1994

GRAY DAVIS
Controller, Sacramento

BURTON W. OLIVER
Executive Director

X----------------------------

Dear X------------------------,
This is in response to your letter of February 25, 1994 in which you request our opinion as to whether a circular soliciting donations for X---------------- qualifies as a printed sales message for purposes of sales tax. As you know, California Revenue and Taxation Code section 6379.5 does provide an exemption for sales and use of printed sales messages for goods and services. An item classified as a printed sales message must meet several other requirements to qualify for the exemption. The issue raised by your letter relates to whether the circulars soliciting donations are printed sales messages for goods and services. Regulation 1541.5 limits the definition of a "printed sales message" to "catalogs, letters, circulars, brochures, and pamphlets printed for the principal purpose of advertising or promoting goods or services." "Campaign literature and other fund-raising materials" are specifically excluded from the definition of a "printed sales message" unless they meet the principal purpose of advertising or promoting goods or services. As described in your letter, the solicitations sent by X---------------- are solicitations for donations. The donations will be used by X------------- to purchase goods and services that it will in turn provide to those in need. The facts indicate that these solicitations are "fund-raising materials". The solicitations, therefore, can only be construed as a "printed sales message" if they meet the principal purpose of advertising or promoting goods or services. Once again, the facts are that these solicitations are requesting donations; they are not advertising or promoting any goods or services. As such, they are not printed sales messages. While we appreciate your concerns and arguments as to why solicitations for donations by non-profit organizations should qualify as printed sales messages, the statutes and regulations, as they exist, do not support your view that these solicitations for donations are printed sales messages. If you have any further questions, please feel free to write again.

Sincerely,,

Sukhwinder K. Dhanda
Staff Counsel
SKD:plh
Cc:

X------------------ District Administrator