Could a Florida section 501(c)(3) nonprofit buy or print its magazines and catalogs without sales tax?

Plain-English summary

The nonprofit could purchase and print its magazines and catalogs without paying Florida sales tax. Although printing tangible personal property is normally taxable, the organization was currently recognized under section 501(c)(3), used the publications in its customary nonprofit activities, and had obtained a Florida Consumer's Certificate of Exemption.

The organization had to furnish the certificate to the printer. The ruling also noted that magazine subscriptions delivered to customers by mail were independently exempt under the subscription provision.

What this means for you

Federal nonprofit status alone was not the only step. The organization also held the Florida exemption certificate and had to use and document it for qualifying purchases. Purchases for resale require different resale documentation under the rule.

Common questions

Q: Is commercial printing normally taxable in Florida? Yes. The ruling says producing or printing tangible personal property for consideration is generally taxable.

Q: Why was this nonprofit's printing exempt? It was a qualifying section 501(c)(3) organization using the magazines and catalogs in its customary nonprofit activities and supplied its Florida exemption certificate.

Q: Were mailed magazine subscriptions taxable? No. The ruling identified a separate exemption for qualifying subscriptions delivered by mail.

Citations and references

• Fla. Stat. §§ 212.02(15)(c) and 212.05(1) — taxable printing sales
• Fla. Stat. § 212.08(7)(p) — section 501(c)(3) organization exemption
• Fla. Stat. § 212.08(7)(w) — mailed magazine subscriptions
• Fla. Admin. Code r. 12A-1.024 — printing tangible personal property
• Fla. Admin. Code r. 12A-1.038 — exempt-entity documentation
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-041

Original ruling text

SUMMARY

QUESTION: Is sales tax due on the purchases or printing
costs of magazines and catalogs of Taxpayer?

ANSWER- Based on the Facts Below: No. Taxpayer has
received a Consumers Certificate of Exemption because
Taxpayer is an organization that was determined by the
Internal Revenue Service to be currently exempt from
federal income tax pursuant to s. 501(c)(3) of the Internal
Revenue Code of 1986. Taxpayer may provide a Consumers
Certificate of Exemption for all purchases and printing
costs of magazines and catalogs without paying the tax.

Oct 04, 2002

Subject: Technical Assistance Advisement 02A-041
Magazine and Catalog Printing Costs
Sales and Use Tax
Section 212.08(7)(p), F.S.
Rule 12A-1.038, F.A.C.
(Taxpayer), Petitioner
Taxpayer Identification Number: XX

Dear :

This is in response to your letter dated July 22, 2002,
requesting a Technical Assistance Advisement regarding the
taxability of purchases and printing costs of Taxpayer's
magazines and catalogs provided to Taxpayer's members and
subscribers.

ISSUE

Whether sales tax is due on the purchases or printing costs of
magazines and catalogs of Taxpayer.

FACTS

Taxpayer is a nonprofit corporation, which is an organization
determined by the Internal Revenue Service to be currently
exempt from federal income tax pursuant to section 501(c)(3) of
the Internal Revenue Code of 1986. Taxpayer's organizational
purpose is to educate the public about its support efforts.
Taxpayer raises funds through membership dues, subscriptions,
and by mail order catalog sales of various products. Certain
magazines are sold by subscription through the mail. Other
magazines are provided through the mail to members paying
membership dues. Catalogs are provided through the mail for no
charge to Taxpayer's members and magazine subscribers.
Magazines and catalogs provided to members and subscribers are a
normal part of Taxpayer's customary nonprofit activities.
Taxpayer applied for and received a Consumers Certificate of
Exemption from the Department.

APPLICABLE STATUTES AND RULES

Section 212.05(1)(a)1.a., F.S., provides in part:

It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who engages
in the business of selling tangible personal property at
retail in this state, including the business of making mail
order sales, or who rents or furnishes any of the things or
services taxable under this chapter, or who stores for use
or consumption in this state any item or article of
tangible personal property as defined herein and who leases
or rents such property within the state.

(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:

(a)1.a. At the rate of 6 percent of the sales price of each
item or article of tangible personal property when sold at
retail....

Section 212.02(14)(a) and (15)(c), F.S., provides in part:

(14)(a) "Retail sale" or a "sale at retail" means a sale to
a consumer or to any person for any purpose other than for
resale....

(15) "Sale" means and includes:

(c) The producing, fabricating, processing, printing, or
imprinting of tangible personal property for a
consideration....

Section 212.07(1)(b) and (8), F.S., provide in part:

(1)(b) A resale must be in strict compliance with s. 212.18
and the rules and regulations, and any dealer who makes a
sale for resale which is not in strict compliance with s.
212.18 and the rules and regulations shall himself or
herself be liable for and pay the tax....

(8) Any person who has purchased at retail, used, consumed,
distributed, or stored for use or consumption in this state
tangible personal property... and cannot prove that the tax
levied by this chapter has been paid to his or her
vendor,... is directly liable to the state for any tax,
interest, or penalty due on any such taxable transactions.

Section 212.06(16)(a), F.S., provides:

(16)(a) Notwithstanding other provisions of this chapter,
the use by the publisher of a newspaper, magazine, or
periodical of copies for his or her own consumption or to
be given away is taxable at the usual retail price thereof,
if any, or at the "cost price."

Section 212.08(7)(p) and (w), F.S. (2002), provides:

(7) MISCELLANEOUS EXEMPTIONS.--Exemptions provided to any
entity by this chapter do not inure to any transaction that
is otherwise taxable under this chapter when payment is
made by a representative or employee of the entity by any
means, including, but not limited to, cash, check, or
credit card, even when that representative or employee is

subsequently reimbursed by the entity. In addition,
exemptions provided to any entity by this subsection do not
inure to any transaction that is otherwise taxable under
this chapter unless the entity has obtained a sales tax
exemption certificate from the department or the entity
obtains or provides other documentation as required by the
department. Eligible purchases or leases made with such a
certificate must be in strict compliance with this
subsection and departmental rules, and any person who makes
an exempt purchase with a certificate that is not in strict
compliance with this subsection and the rules is liable for
and shall pay the tax. The department may adopt rules to
administer this subsection.

(p) Section 501(c)(3) organizations.--Also exempt from the
tax imposed by this chapter are sales or leases to
organizations determined by the Internal Revenue Service to
be currently exempt from federal income tax pursuant to s.
501(c)(3) of the Internal Revenue Code of 1986, as amended,
when such leases or purchases are used in carrying on their
customary nonprofit activities.

(w) Certain newspaper, magazine, and newsletter
subscriptions, shoppers, and community newspapers.- Likewise
exempt are newspaper, magazine, and newsletter
subscriptions in which the product is delivered to the
customer by mail. Also exempt are free, circulated
publications that are published on a regular basis, the
content of which is primarily advertising, and that are
distributed through the mail, home delivery, or newsstands.
The exemption for newspaper, magazine, and newsletter
subscriptions which is provided in this paragraph applies
only to subscriptions entered into after March 1, 1997.

Rule 12A-1.024(1), F.A.C., provides:

(1) The producing, fabricating, processing, printing or
imprinting of tangible personal property is taxable.

Rule 12A-1.038(3)(a), (b), and (c), F.A.C., provide in part:

(3) SALES MADE TO EXEMPT ENTITIES OTHER THAN GOVERNMENTAL
UNITS.

(a) An entity that holds a valid Consumer's Certificate of
Exemption (form DR-14) issued by the Florida Department of
Revenue may extend a copy of its certificate to the selling
dealer to purchase or rent taxable property, admissions, or
services used for its authorized tax exempt purpose in lieu
of paying sales tax....

(b) To make purchases or rentals for the purposes of
resale, the entity must be registered as a sales tax dealer
and issue the selling dealer an Annual Resale Certificate
(form DR-13), as provided in Rule 12A-1.039, F.A.C.

(c) It is the exempt entity's responsibility to determine
whether the purchase or rental will be used for its
authorized tax exempt purpose or for the purposes of resale
and to provide the proper documentation to the selling
dealer....

RESPONSE

"Sale" includes the printing of tangible personal property,
including magazines and catalogs, for consideration, as provided
by section 212.02(15)(c), F.S., and is subject to the tax
imposed by section 212.05(1), F.S., and Rule 12A-1.024, F.A.C.
However, the magazines sold by subscription that are delivered
to the customer by mail are not subject to the tax as provided
by section 212.08(7)(w), F.S.

Section 212.08(7)(p), F.S., provides an exemption from the tax
on purchases made by organizations that are determined by the
Internal Revenue Service to be currently exempt from federal
income tax pursuant to s. 501(c)(3) of the Internal Revenue Code
of 1986. Since Taxpayer is such an organization, Taxpayer
qualifies for the exemption provided by section 212.08(7)(p),
F.S. In addition, since Taxpayer has obtained a Consumer's
Certificate of Exemption required by section 212.08(7), F.S.,
Taxpayer may purchase or print its magazines and catalogs that
are given away free without paying the tax. Taxpayer must

furnish a copy of the Consumers Certificate of Exemption to the
printer as provided by Rule 12A-1.038(1), F.A.C.

This response constitutes a Technical Assistance Advisement
under Section 213.22, F.S., which is binding on the Department
only under the facts and circumstances described in the request
for this advice as specified in Section 213.22, F.S. Our
response is predicated on those facts and the specific situation
summarized above. You are advised that subsequent statutory or
administrative rule changes, or judicial interpretations of the
statutes or rules, upon which this advise is based, may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer.

Your response should be received by the Department within 15
days of the date of this letter.

Sincerely,

Charles Wallace
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 922-4734

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