Was a membership service a retailer when it supplied personality information through cards or letters for one lump-sum charge regardless of quantity?

Plain-English summary

A proposed membership business furnished personality information to its clients through cards or letters.

The cards and letters were supplied only to members receiving the described services. The business charged one lump sum regardless of how many items it furnished.

California treated the business as a service enterprise and the consumer, rather than retailer, of the tangible property used in providing the information.

The opinion remained subject to any additional facts the local office might identify.

What this means for you

Membership and information services

Information-focused service terms and quantity-independent lump-sum pricing supported consumer treatment for the delivery materials.

Accountants and tax professionals

Document the membership service, information developed, eligible recipients, number of items, pricing basis, and any standalone sales.

Common questions

Q: Was the business treated as a retailer of cards and letters?

A: No.

Q: What pricing fact supported service treatment?

A: The same lump sum applied regardless of the number of cards or letters.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 515.0800
• Original supporting opinion: 515.0800 PDF

Original ruling text

515.0800

April 1, 1950
REDACTED TEXT
This is in reply to your letter of March 30, in which you describe your proposed operations, requesting information as to whether you require a seller’s permit under the Sales and Use Tax Law. From the contents of your letter and from Mr. Gregory’s description of your activities given to me by telephone at the time of your call at his office, it is our opinion that you are engaged in a service enterprise and will be regarded as the consumer and not the retailer of the tangible personal property used in connection with rendering this service. It is understood that you furnish information to your membership through the medium of cards or letters and that these are furnished only to those clients for whom you render the services described, and that you make a lump-sum charge regardless of the number of cards or letters that you might furnish to a member. We are sending a copy of this letter to our Stockton Office for the records of that office. In the event that office has any additional information which it believes has not received full consideration, such information will be taken into account and should it appear that our conclusion as expressed herein is not warranted by the facts, we will advise you accordingly. Very truly yours, E. H. Stetson Tax Counsel EHS:ph REDACTED TEXT