Was a separately stated newspaper carrier-delivery charge nontaxable when subscribers could avoid it by choosing pickup or mail?

Plain-English summary

Florida found the newspaper's independent-carrier delivery charge nontaxable when subscribers could avoid it and the publisher stated it separately. The publisher changed its procedure so subscribers chose carrier delivery, pickup at a publisher-operated distribution center, or mail at the start of each new or renewed subscription.

Three conditions controlled

The carrier charge was nontaxable only if:

1. The subscriber was told the carrier and mail charges at the initial subscription or renewal.
2. The subscriber was told that pickup or mail could avoid the carrier charge.
3. The carrier charge was separately stated on the invoice.

The purchaser therefore controlled whether to incur the transportation charge, satisfying Rule 12A-1.045.

The newspaper and delivery were analyzed separately

The publisher still collected tax on the implicit newspaper price for carrier-delivered subscriptions. A subscription designated for mail at the beginning of the subscription period had a separate periodical exemption under the law quoted in the ruling.

What this means for you

Publishers should disclose delivery choices and charges before a new or renewal period begins, preserve the subscriber's choice, and separate the optional carrier charge from the taxable product price. Merely renaming a mandatory charge does not satisfy the rule described here.

Common questions

Q: Was the carrier charge taxable?
A: No, if all three disclosure, choice, and invoice conditions were met.

Q: Could the subscriber avoid it?
A: Yes, by selecting distribution-center pickup or mail.

Q: Did that exempt the carrier-delivered newspaper itself?
A: No. The publisher continued to tax the newspaper's implicit sales price.

Q: When did the publisher have to disclose the options?
A: At the initial subscription or renewal.

Citations and references

• Fla. Stat. §§ 212.02(16), 212.05, and 212.07(2) — sales price, retail tax, and invoicing
• Fla. Stat. § 212.08(7)(w); Fla. Admin. Code r. 12A-1.008(1) — periodical subscriptions
• Fla. Admin. Code r. 12A-1.045 — transportation charges
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 03A-050

Original ruling text

SUMMARY

QUESTION 1: Are newspaper delivery charges subject to sales
tax when the charge is separately stated and can be avoided
by the customer?

ANSWER 1 - Based on Facts Below: No. The Company is not
required to collect sales tax on the charge for newspaper
delivery by independent carriers if: 1) at the time of the
initial subscription or subsequent renewal, the subscriber
is informed of the carrier delivery charge and mail
delivery charge; 2) at the time of the initial subscription
or subsequent renewal, the subscriber is informed that the
delivery charge can be avoided by an election to either
pick up the newspapers at a distribution center or to
receive the newspapers by mail; and 3) the carrier delivery
charge is separately stated on the invoice.

Oct 23, 2003

Re: Technical Assistance Advisement 03A-050
Newspaper Delivery Charges
Sales and Use Tax
Sections 212.02 and 212.05, F.S.
Rule 12A-1.045, F.A.C.
XXX ("the Taxpayer")
FEI Number:

Dear :

This response is in reply to your petition dated August 29,
2003, requesting the Department's issuance of a Technical
Assistance Advisement pursuant to s. 213.22, F.S., and Chapter
12-11, F.A.C., regarding the above referenced matter and
parties. An examination of your petition has established that
you have complied with the statutory and regulatory requirements
for issuance of a TAA. Therefore, the Department is hereby
granting your request for issuance of a TAA.

ISSUE

Whether newspaper delivery charges are subject to sales tax when
the charge is separately stated and can be avoided by the
customer.

FACTS

You have provided a letter and eleven documents (the
"Documents") proposed to be used by the Taxpayer. Your letter
provides in part:

... The Taxpayer, a newspaper publisher, publishes a daily
newspaper commonly known as [Newspaper]. The Taxpayer has
its principal offices in... XXX. The Taxpayer sells
newspapers through various means, including subscriptions
whereby a subscriber agrees to receive and pay for the
newspaper for a specified period of time, typically 4, 8,
12, 26 or 52 weeks. Delivery of the newspaper is made to
the subscriber's residence or business by independent
contractors who have written agreements with the Taxpayer
to deliver newspapers within a specified geographic
territory. The Taxpayer pays the independent contractor for
this service. Subscribers may, upon request, have the
newspaper mailed to them rather than have the paper
delivered by a carrier.

Historically, subscribers who had their paper delivered by
the independent carrier were charged appropriate XXX sales
tax (including local option taxes where applicable) based
upon the total amount charged, which effectively included
the delivery charge incurred by the Taxpayer and which was
not separately stated on the subscriber's invoice.

On August 11, 2003, the Taxpayer changed its delivery and
billing practices. Subscribers will now pay a separate
price for the newspaper and a charge for delivery.
Pursuant to the new procedure, subscribers will have three
delivery options at the commencement or renewal of a
subscription period. These options are:

(1) A subscriber may elect to have the paper delivered
by carrier.

(2) A subscriber may elect to pick up the paper at one
of several distribution centers operated by the
Taxpayer.

(3) A subscriber may elect to receive the paper by
mail delivery.

... Subscribers are free to choose their delivery options
at the commencement of the initial subscription period or
at the commencement of any renewal period. Some
subscribers (both new and renewal) will make an advance
payment via credit card for a defined subscription period.
The Taxpayer sends these "advance pay" subscribers a letter
that both states the transportation charge and informs of
the delivery options, including the subscriber's option to
pick up the newspaper at a distribution center operated by
the Taxpayer. See "Notice to Auto-Pay Subscribers- Number
9."

In the case of new subscriptions or renewals, all
subscribers will be sent a confirmation letter confirming
the subscription or renewal. The confirmation letter sets
forth the amount due for a subscription and separately
states the charge for delivery (referred to as
transportation costs in the confirmation letter) and the
amount of sales tax that is imposed on the price for the
newspaper. Although the subscription price may vary for
customers depending on service type and delivery area, the
transportation cost remains the same, and is reflected on
the payment stub of several of the documents. See "New
Subscription Form," "Reminder Notice," "Reminder Renewal
Notice," "Renewal Notice," and "Final Renewal Notice." The
specific amount for the newspaper cost is not separately
stated. Under the new procedure, appropriate sales tax
(including local option taxes where applicable) will be
charged on the implicit sales price of the newspaper but
not the delivery charge, because the subscriber has the

option to receive the paper by carrier delivery or to pick
up the newspaper at a distribution center and avoid the
delivery charge. Consistent with the Taxpayer's existing
practice, sales tax will not be imposed on the sale price
of a newspaper when the subscriber elects to receive the
newspaper by mail at the beginning of a subscription
period. See, Section 212.08(7)(w), Fla. Stat.

TAXPAYER POSITION

In your letter, dated August 29, 2003, you state:

... Finally, in Case No. 02-2-DS, the Department recently
issued a Declaratory Statement to the Miami Herald
Publishing Company, and concluded that the Miami Herald was
not required to collect sales tax for newspaper
delivery.... The Documents provided by the Taxpayer are
consistent with the foundation on which this Declaratory
Statement stands, and the Department should issue an
advisement to the Taxpayer that the procedures it employs,
as reflected in the Documents, results in no sales tax
being imposed on the transportation costs.

APPLICABLE AUTHORITY

Section 212.05, F.S., states in pertinent part as follows:

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....

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 in this state, computed on each taxable sale for the

purpose of remitting the amount of tax due the state, and
including each and every retail sale....

Section 212.02(16), F.S., defines "sales price" as follows:

(16) "Sales price" means the total amount paid for tangible
personal property, including any services that are a part
of the sale, valued in money, whether paid in money or
otherwise, and includes any amount for which credit is
given to the purchaser by the seller, without any deduction
therefrom on account of the cost of the property sold, the
cost of materials used, labor or service cost, interest
charged, losses, or any other expense whatsoever....

Section 212.07, F.S., states in pertinent part:

(2) A dealer shall, as far as practicable, add the amount
of the tax imposed under this chapter to the sale price,
and the amount of the tax shall be separately stated as
Florida tax on any charge ticket, sales slip, invoice, or
other tangible evidence of sale. Such tax shall constitute
a part of such price, charge, or proof of sale which shall
be a debt from the purchaser or consumer to the dealer,
until paid, and shall be recoverable at law in the same
manner as other debts. Where it is impracticable, due to
the nature of the business practices within an industry, to
separately state Florida tax on any charge ticket, sales
slip, invoice, or other tangible evidence of sale, the
department may establish an effective tax rate for such
industry. The department may also amend this effective tax
rate as the industry's pricing or practices change. Except
as otherwise specifically provided, any dealer who
neglects, fails, or refuses to collect the tax herein
provided upon any, every, and all retail sales made by the
dealer or the dealer's agents or employees of tangible
personal property or services which are subject to the tax
imposed by this chapter shall be liable for and pay the tax
himself or herself.

Rule 12A-1.008, F.A.C., states in pertinent part as follows

(1)(a) For purposes of this rule, the term "periodicals"
includes newspapers, community newspapers, shoppers,
newsletters, magazines, and other periodicals, but excludes
books, whether published in serial form or otherwise.

(b)1. The sale of copies of periodicals is subject to tax.
The sale of subscriptions to periodicals that are delivered
to a subscriber in this state by a carrier or means other
than by mail, such as home delivery, is subject to tax.
When the designation of delivery is in this state by means
other than by mail at the beginning of the subscription
period, and it is later changed to outside this state or to
be delivered by mail, the sale of the subscription is
subject to tax.

2. The sale of subscriptions to periodicals that are
   delivered to the subscriber by mail are exempt whether
   delivered to a customer in this state or outside this
   state. When the destination of delivery at the beginning of
   the subscription period is by mail, but it is changed
   during the subscription period to be delivered in this
   state by a carrier or by means other than by mail, the sale
   of the subscription is exempt.... (Emphasis supplied)

Rule 12A-1.045, F.A.C., states in pertinent part as follows:

(1) "Transportation charges" include carrying, delivery,
freight, handling, pick up, shipping, and other similar
charges or fees.

(2) Transportation charges which are not separately stated
on an invoice or bill of sale, but are included in the
sales price of taxable tangible personal property, are
subject to tax.

(3)(a) Where the seller agrees to deliver tangible personal
property to some designated place and the purchaser cannot
elect to avoid the charge for transportation services, the
charge for the transportation service is subject to tax,
even if separately stated on an invoice or bill of sale....

(4)(a) The charge for transportation services is not
subject to tax when both of the following conditions have
been met:

1. The charge is separately stated on an invoice or bill of
   sale; and

2. The charge can be avoided by a decision or action solely
   on the part of the purchaser....

Determination

The Company is not required to collect sales tax on the charge
for newspaper delivery by independent carriers if: 1) at the
time of the initial subscription or subsequent renewal, the
subscriber is informed of the carrier delivery charge and mail
delivery charge; 2) at the time of the initial subscription or
subsequent renewal, the subscriber is informed that the delivery
charge can be avoided by an election to either pick up the
newspapers at a distribution center or to receive the newspapers
by mail; and 3) the carrier delivery charge is separately stated
on the invoice.

The confirmation letter sets forth the amount due for a
subscription and separately states the charge for delivery
(referred to as transportation costs in the confirmation letter)
and the amount of sales tax. Pursuant to Rule 12A-1.045(4)(a)
2., F.A.C., the charge can be avoided by a decision or action
solely on the part of the purchaser. In the present case,
providing the above three criteria are met, no tax is due on the
newspaper delivery charge.

This response constitutes a Technical Assistance Advisement
under s. 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 s. 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,

Valerie L. Koenitzer, CPA
Senior Tax Specialist
Technical Assistance & Dispute Resolution

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Control No. 56639