Must a printer charge Colorado sales tax to print a bi-weekly newspaper that the owner distributes free to the public?

Plain-English summary

A Colorado company that produces a daily newspaper also prints a bi-weekly newspaper for a third party, who hands it out free to the public. The printer asked whether it has to charge Colorado sales tax on the printing. The Department said yes.

The reasoning runs through three steps:

1. Newspapers are tangible personal property — but "legal publication" newspapers are carved out. Colorado's definition of tangible personal property (§ 39-26-102(15)) excludes newspapers that qualify as a "legal publication" under § 24-70-102, and those qualifying newspapers are exempt from sales and use tax.

2. A bi-weekly paper doesn't qualify. The "legal publication" definition lists qualifying papers by frequency of distribution (daily, five days a week, and so on). A paper distributed every two weeks isn't on the list, so it is not an exempt newspaper — it's ordinary taxable tangible personal property.

3. Printing for free distribution is a taxable retail sale, not a wholesale sale. Under FYI Sales 47 (Printers and Printing), printed matter that the buyer distributes free rather than reselling is a taxable retail sale. The distributor isn't reselling the paper to readers, so the printer's charge isn't an exempt sale-for-resale. The printer must collect sales tax from the distributor. And if the distributor pays no sales tax — for instance, by using an out-of-state printer — it owes Colorado use tax on the printing charge instead (FYI Sales 44).

The takeaway: the exemption depends on whether the publication itself qualifies as a "legal publication," and "free to the reader" means the printing is a retail sale, not a resale.

What this means for you

Printers

If you print a publication that the customer gives away free, treat your charge as a taxable retail sale and collect Colorado sales tax — unless the publication itself qualifies as an exempt "legal publication" newspaper (which turns on frequency under § 24-70-102). Don't assume a "newspaper" is automatically exempt; a bi-weekly, monthly, or other off-frequency paper generally is not.

Publishers and distributors of free papers and circulars

When you give a publication away rather than sell it, you're the end user. If your printer didn't charge sales tax (common with an out-of-state printer), you owe Colorado use tax on the printing cost. Budget for that.

Accountants and tax professionals

Two gating questions: (1) Does the publication meet the "legal publication" frequency test in § 24-70-102 (exempt) or not (taxable TPP)? (2) Is the buyer reselling the printed matter (exempt wholesale) or distributing it free (taxable retail/use)? Free distribution defeats the sale-for-resale claim under FYI Sales 47.

Common questions

Q: Is a bi-weekly newspaper exempt from Colorado sales tax like a daily paper?
A: No. The "legal publication" exemption is keyed to frequency (daily, five days a week, etc.). A bi-weekly paper doesn't qualify, so it's taxable tangible personal property.

Q: Why is printing a free paper a 'retail' sale rather than a resale?
A: A sale-for-resale exemption applies only when the buyer resells the goods. A publisher who distributes the paper free to readers isn't reselling it, so the printing is a taxable retail sale.

Q: We used an out-of-state printer and paid no Colorado sales tax. Do we owe anything?
A: Yes — Colorado use tax on the printing charge, because you're distributing the non-exempt newspaper for your own use/consumption.

Q: Can I rely on this letter?
A: No. A General Information Letter is general guidance, not binding on the Department. For a binding determination on your facts, request a private letter ruling (which requires a fee).

Citations and references

Statutes, rules, and guidance:
- § 39-26-102(15), C.R.S. (tangible personal property excludes "legal publication" newspapers)
- § 24-70-102, C.R.S. (definition of "legal publication," classified by frequency)
- FYI Sales 47 (Printers and Printing — free distribution is a taxable retail sale)
- FYI Sales 44 (Newspapers, Magazines and Other Publications — full "legal publication" definition; use tax on free trade publications)

Source

• Landing page: Colorado All Letter Rulings
• Original PDF: GIL-11-008.pdf

Original ruling text

Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]

GIL-11-008
December 8, 2010
XXXXXXXXXXXXXXXXX
Attn: XXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
Re: General Information Letter re: printers / bi-weekly newspapers
Dear XXXXXXXXXXXXXX,
You submitted a request for guidance on the application of Colorado sales and use tax to
charges for printing of a bi-weekly newspaper. The department issues two types of guidance:
general information letters and private letter rulings. A general information letter is a general
discussion of taxes but is not a determination with respect to any specific set of facts. A
private letter ruling is a determination with respect to a specific set of facts, and is binding on
the department but not on the taxpayer. Pursuant to statute, the department must charge a
fee for a private letter ruling, which is $500 for most rulings. For more information about
general information letters and private letter rulings, see regulation 24-35-103.5 which can be
viewed on our web site at http://www.colorado.gov/revenue/tax and select FYI > Publications

Rulings. I will initially treat your request as one for a general information letter, but you may
resubmit the request at any time as one for a private letter ruling.
Issue
Must a printer charge sales tax on its charge for printing a bi-weekly newspaper owned by
another company and distributed by that company without charge to the public?
Background
Your company (“Company”) produces and distributes a daily newspaper in Colorado.
Company also prints a bi-weekly newspaper owned by a third-party who distributes the
newspaper in Colorado without a charge to readers.

Discussion
Colorado imposes sales or use tax on the sale, use, storage or consumption of “tangible
personal property.” Tangible personal property is defined as corporeal personal property.
Newspapers are corporeal personal property and, therefore, would otherwise qualify as

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tangible personal property. However, tangible personal property is defined by statute not to
include newspapers that qualify as a “legal publication,” as defined in §24-70-102.1 As such,
these qualifying newspapers are exempt from sales and use tax.
The statute defining a “legal publication” sets forth a list of qualifying newspapers, which are
generally classified by the frequency of distribution (e.g., daily, five days a week, etc.). A
newspaper distributed every two weeks does not qualify as a “legal publication” and,
consequently, does not qualify as a “newspaper” that is exempt from Colorado sales and use
taxes.
Although a bi-weekly newspaper is tangible personal property, the question then arises
whether the charge for printing such a newspaper for another creates a sales or use tax
liability. Department Special Regulation (FYI Sales 47) (Printers and Printing) addresses a
printer’s tax obligation for printing material for another who distributes the material for free to
readers.
Sales of catalogues, books, letterheads, bills, envelopes, folders, advertising
circulars, and other printed matter are taxable retail sales if the purchaser does
not resell the articles but uses or consumes them as by distributing them free.
In other words, the fee charged by a printer to a distributor is not an exempt sale-for-resale
(i.e., exempt wholesale sale), but, rather, is a taxable retail sale because the distributor does
not resell the material to the reader. See, also, Department FYI Sales 44 (Newspapers,
Magazines and Other Publications) (sets forth the full definition of a “legal publication”). As a
retailer of tangible personal property, a printer must collect sales tax from the distributor of a
non-exempt newspaper.
Similarly, a distributor who has not paid sales tax on the fee charged by a printer for printing a
non-exempt newspaper must pay use tax. See, FYI Sales 44 (“Organizations which produce
and distribute free trade publications, etc. are deemed to be purchasers for their use or
consumption and are subjected to tax based on the purchase price of the tangible personal
property used.”). For example, a distributor who distributes a non-exempt newspaper in
Colorado must pay Colorado use tax on printing charges paid to an out-state printer.
I hope this is helpful. Please feel free to contact me if you have any other questions.

Miscellaneous
Please note that this letter addresses only sales and use taxes administered by the
Department. It does not address sales and use taxes administered by home-rule
cities and counties. We encourage you to contact home rule jurisdictions to discuss
the application, if any, of their sales and use taxes. For a complete list of department
administered tax jurisdictions and home-rule jurisdictions, please visit our web site at
www.taxcolorado.org and select “Tax Forms” > “Sales” > “Tax Rates.”
Enclosed is a redacted version of this letter. Pursuant to statute and regulation, this
redacted version of the letter will be made public within 60 days of the date of this
1 “Tangible personal property means corporeal personal property. The term shall not be construed to include
newspapers, as legally defined by section 24-70-102, C.R.S., preprinted newspaper supplements ...” §3926-102(15), C.R.S.

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letter. Please let me know in writing within that 60 day period whether you have any
suggestions or concerns about this redacted version of the letter.

Sincerely,

Office of Tax Policy
Colorado Department of Revenue

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