Was a separately stated newspaper carrier-delivery charge exempt from Florida sales tax when subscribers could avoid it by choosing pickup or mail?

Plain-English summary

Florida concluded that the publisher did not have to collect sales tax on an independent carrier's newspaper-delivery charge when the charge was optional and separately stated. Subscribers had to be able to avoid it through their own choice.

The daily newspaper offered three options at the start of a subscription or renewal:

1. Delivery by an independent carrier.
2. Customer pickup at a distribution center.
3. Delivery by mail.

The confirmation letter separately identified the carrier-delivery charge, described as transportation cost, and stated the sales tax on the newspaper price. Subscribers could choose pickup or mail instead of carrier delivery.

Three conditions made the carrier charge nontaxable

The Department required that, at the initial subscription or renewal:

1. The subscriber was told the carrier-delivery charge and mail-delivery charge.
2. The subscriber was told the charge could be avoided by choosing distribution-center pickup or mail.
3. The carrier-delivery charge was separately stated on the invoice.

Rule 12A-1.045 treated a transportation charge as nontaxable only when it was separately stated and avoidable solely through the purchaser's decision or action. The publisher's proposed documents met that test.

The newspaper price remained a separate issue

Carrier-delivered newspaper subscriptions were taxable under the periodical rule then applied, while subscriptions designated for mail delivery at the beginning of the subscription period were exempt. Removing tax from the optional carrier charge did not remove tax from the otherwise taxable newspaper price.

What this means for you

Newspaper and periodical publishers

Customer choice must be real and disclosed before the subscription period. A separately printed charge is not enough if the customer cannot avoid it.

Subscription and billing teams

Show the delivery charge separately, explain pickup and mail alternatives, and preserve the subscriber's delivery election at each new subscription or renewal.

Accountants and tax professionals

Analyze the product price and transportation charge separately. Delivery method can also affect the subscription itself under the periodical rules.

Common questions

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

Q: Could the publisher simply label part of the subscription price “delivery”?
A: No. The subscriber had to be able to avoid the charge by choosing pickup or mail.

Q: When did the subscriber need to receive the delivery choices?
A: At the initial subscription or a subsequent renewal.

Q: Did the ruling make the newspaper itself tax-free?
A: No. It separated the optional delivery charge from the newspaper's taxable sales price; mail-designated subscriptions had their own exemption.

Citations and references

• Fla. Stat. § 212.02(16) — sales price and included services
• Fla. Stat. § 212.05 — retail sales tax
• Fla. Stat. § 212.07(2) — dealer collection and invoicing
• Fla. Stat. § 212.08(7)(w); Fla. Admin. Code r. 12A-1.008(1) — periodical subscriptions by mail or carrier
• Fla. Admin. Code r. 12A-1.045 — transportation-charge taxability
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-020

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.

Mar 24, 2004

Subject: Technical Assistance Advisement 04A-020
Sales and Use Tax - Newspaper Delivery Charges
Sections 212.02 and 212.05, F.S.
Rule 12A-1.045, F.A.C.

Dear :

This response is in reply to your petition dated February 24,
2004, 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 party.
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 nine 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... Florida. The Taxpayer sells
newspapers to the newspaper carriers, and the newspaper
carriers then sell the newspapers to the subscribers.
Subscribers receive and pay for the newspaper for a
specified period of time, typically 4, 13, 26 or 52 weeks.
The newspaper is delivered to the subscriber by the
newspaper carrier. Subscribers may, upon request, have the
newspaper mailed to them rather than have the paper
delivered by a carrier. In most situations, the Taxpayer
will act as the carrier's agent in accepting a subscription
and collecting payment for the subscription price,
including applicable sales tax.

Historically, subscribers who had their paper delivered by
the carrier were charged appropriate Florida 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 December 5, 2003, the Taxpayer and the carriers
collectively commenced implementing a change in their
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 made available to the
carrier 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.

In the case of new subscriptions or renewals, all
subscribers will be sent a 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 letter) and the amount of sales tax that is imposed on
the price for the newspaper. 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 February 24, 2004, 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, [result] 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....

(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 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 Taxpayer 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

vk/
Control No. 59154