Was a free booklet mailed to local consumers exempt from Florida use tax as a publication whose content was primarily advertising?

Plain-English summary

Florida denied the exemption for this free mailed booklet because the publication was not primarily advertising. Its address-book and gift-certificate sections did not count as advertising, so the publisher remained liable for use tax on the booklet's cost price.

The publisher produced the booklet outside Florida and mailed it free to potential consumers in the general areas served by local advertisers. It described the publication as monthly—three times a month—and was already paying use tax on the booklets' cost.

The exemption had three requirements

Section 212.08(7)(w) and Rule 12A-1.008(3) exempted a periodical when it was:

1. Published on a regular basis.
2. Distributed free by mail, home delivery, newsstand, rack, or similar method.
3. Primarily advertising in content.

The booklet met the regular-publication and free-distribution elements. It failed the content test after the Department reviewed the submitted copy.

Use tax applied to cost price

Section 212.06(16) taxed a publisher's own use or giveaway of newspapers, magazines, and periodicals at retail price, if any, or cost price. The statute defined cost price by the actual printing cost, including printing materials, labor or services, transportation, and related direct or indirect printing overhead.

Because the booklet was not exempt, the Department confirmed that paying use tax on its cost was correct.

What this means for you

Publishers of free local guides

Free distribution and advertiser funding do not by themselves establish exemption. Editorial, directory, coupon, certificate, or other non-advertising sections can affect whether content is primarily advertising.

Direct-mail businesses

Keep representative copies and a supportable content classification. The Department based this ruling on reviewing the actual publication, not the publisher's description alone.

Printers and advertisers

An exempt publisher may be able to give vendors an exemption certificate for printing and component materials, but only when the publication satisfies all statutory requirements.

Common questions

Q: Was the booklet distributed free?
A: Yes, principally through the mail.

Q: Why did it fail the exemption?
A: The address-book and gift-certificate sections were not advertising, so the booklet was not primarily advertising.

Q: What tax base applied?
A: The publisher's cost price for the giveaway publication.

Q: Did out-of-state printing avoid Florida use tax?
A: No. The ruling confirmed use tax on the publisher's Florida use of the nonexempt booklets.

Citations and references

• Fla. Stat. § 212.05 — sales and use tax on tangible personal property
• Fla. Stat. § 212.06(16) — publisher giveaways and cost-price tax base
• Fla. Stat. § 212.08(7)(w) — free publications primarily containing advertising
• Fla. Admin. Code r. 12A-1.008(3) — requirements for exempt periodicals

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-046

Original ruling text

SUMMARY
QUESTION: Is the provided Publication exempt under the provisions of Section 212.08(7), F.S.?
ANSWER - Based on Facts Below: No. Based on the information provided the Publication does not satisfy the
exemption requirements. It does not consist primarily of advertising.

August 6, 2004

Re: Technical Assistance Advisement 04A-046
Sales and Use Tax - Shoppers
Section, 212.05, 212.08(7)(w), 212.06(16), F.S.
Rule 12A-1.008 (3), F.A.C.
Dear :
This is in response to your letter dated May 28, 2004, and other correspondence provided requesting a technical
assistance advisement (TAA) regarding the above referenced party and matter. Your letter has been carefully
examined and the Department finds it to be in compliance with the requisite criteria set forth in Chapter 12-11, F.A.C.
This response to your request constitutes a TAA and is issued to you under the authority of section 213.22, F.S.
FACTS
You state in your letter, referenced above, that you publish the XXX booklet (Booklet). The publication is distributed
free of charge, on a regular basis. It is mainly distributed through the mail to potential consumers. You have enclosed
one copy for our review.
ISSUE PRESENTED
Whether the Booklet is exempt under the provisions of Section 212.08(7)(w), F.S.
TAXPAYER POSITION
You state in your letter:
... We publish a monthly (3 times a month) advertisement booklet to potential consumers free of charge. The copies
of the booklet are printed out of state, and mailed directly to potential consumers free of charge. The method used to

mail is U.S. postal service. The content of the booklet (see enclosed copies) is solely advertisements....
We are currently paying use tax on the cost of the booklets....
... The booklets are produced by our Welcome Wagon division (WW) in [New York]. WW solicits advertising space
from local merchants. Our booklets are subsequently delivered via U.S. postal service to individuals living in the
general area of the advertisers....
APPLICABLE STATUTES AND RULES
Section 212.05, F.S., provides in pertinent 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 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 212.06(16), 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."
(b) For the purposes of this subsection, the term "cost price" means the actual cost of printing of newspapers,
magazines, and other publications, without any deductions therefrom on account of the cost of materials used, labor
or services cost, transportation charges, or other direct or indirect overhead costs that are a part of printing costs of
the property. However, the cost of labor to manufacture, produce, compound, process, or fabricate expendable items
of tangible personal property which are directly used by such person in printing other tangible personal property for
sale or for his or her own use is exempt. Authors' royalties, fees, or salaries, general overhead, and other costs not
directly related to printing shall be deemed to be labor associated with manufacturing, producing, compounding,
processing, or fabricating expendable items.
Section 212.08(7)(w), F.S., provides:
(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 31, 1997.
Rule 12A-1.008 (3), F.A.C., provides:
(3)(a) Periodicals that meet the following requirements are exempt from tax:
The periodical is published on a regular basis;
The periodical is distributed free of charge to the recipient by mail, home delivery, rack machines, newsstands, or
similar method; and The content of the periodical is primarily advertising.
(b) The sale of subscriptions to periodicals that are delivered to the subscriber by mail are exempt.
(c) Distributors of tax exempt periodicals may issue an exemption certificate to their vendors in lieu of paying tax on
the publishing or printing costs of, or for the purchase of items, such as paper and ink, that are incorporated into and
become a component part of, the publication.
RESPONSE
Section 212.05, F. S., provides that tax is imposed on the sales price of each item or article of tangible personal
property sold at retail in this state. Section 212.06(16)(a), F.S., further provides that the use by a publisher of copies
of a newspaper, magazine, or periodical for its own consumption or to be given away is taxable. Use tax is due on the
"cost price" of the publication.
Section 212.08(7)(w), F.S., and Rule 12A-1.008(3), F.A.C., provide exemptions for certain publications from the tax
imposed by Chapter 212, F.S. However this would not apply to your publication.
The Booklet is not primarily advertising. The address book and gift certificate sections are not classified as
advertising. Therefore, it does not satisfy the requirements provided in Section 212.08(7)(w), F.S., and is not exempt
from tax. Your current tax practice of paying use tax on the cost of the booklets is correct.
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
advice 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 Koenitzer, C.P.A.
Senior Tax Specialist
Technical Assistance and Dispute Resolution
(850) 922-9412
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