Did a monthly Florida shoppers publication qualify for the sales-tax exemption for free advertising publications?

Plain-English summary

Florida found the monthly shoppers publication exempt from sales and use tax because it was regularly published, distributed free, and primarily advertising.

The printer produced about 17,500 copies each month. Each issue averaged 59% advertising, and more than 90% of the copies were distributed free or mailed free to potential advertisers. Distribution included mail, home delivery, rack machines, newsstands, and similar methods.

The Department reviewed three sample copies and concluded that the publication satisfied section 212.08(7)(w) and Rule 12A-1.008(3).

Three exemption requirements

The quoted rule required an exempt periodical to be:

1. published on a regular basis;
2. distributed free to recipients by mail, home delivery, rack machines, newsstands, or a similar method; and
3. composed primarily of advertising.

Because the publication met those conditions, the printer could accept an exemption certificate from the publisher for the printing costs under the rules cited in the response.

Continuing qualification and past tax

The Department cautioned that the conclusion rested on the submitted sample copies. The publication had to continue satisfying the statutory requirements for the exemption to continue.

The printer had previously collected and remitted sales tax on its printing charges. It could not receive a refund or credit for that tax unless it first refunded the publisher. The TAA also stated that the refund or credit was limited to tax paid during the 36 months before the application or credit.

What this means for you

A free-circulation label alone was not enough. Publishers and printers needed evidence of regular publication, qualifying free-distribution channels, and content that remained primarily advertising. Sample issues and circulation records supported the result here.

Common questions

Q: Did every copy have to be distributed free?
A: The ruling approved the submitted facts, under which more than 90% of the 17,500 copies were distributed free or mailed free.

Q: Was 59% advertising enough to be “primarily advertising”?
A: Yes, based on the Department's review of the sample issues.

Q: Could the printer stop charging tax after receiving an exemption certificate?
A: Yes, for the qualifying publication under the cited rules.

Q: Could the printer keep tax already collected and also claim a refund?
A: No. It had to refund the publisher before obtaining a state refund or credit.

Citations and references

• Fla. Stat. § 212.05 — tax on retail sales
• Fla. Stat. § 212.06(16) — publisher use and the cost price of printing
• Fla. Stat. § 212.08(7)(w) — exemption for qualifying free advertising publications
• Fla. Stat. § 213.756 — collected tax treated as state funds
• Fla. Stat. § 215.26 — refund limitation cited by the TAA
• Fla. Admin. Code r. 12A-1.008(3) — exempt periodical requirements
• Fla. Admin. Code r. 12A-1.014(3) — customer refund before dealer refund or credit

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-064

Original ruling text

SUMMARY
QUESTION 1: Is the provided Publication exempt under the provisions of Section 212.08(7), F.S.?
ANSWER 1 - Based of Facts Below: Yes. The Publication is distributed on a regular basis, through the mail and free
of charge. It consists primarily of advertising. Based on the information provided and on a review of the included
sample copies, the Publication satisfies the exemption requirements of s. 212.08(7)(w), F.S.

November 30, 2004

Re: Technical Assistance Advisement 04A-064
Sales and Use Tax - Shoppers
Section, 212.08(7)(w), F.S.
Rule 12A-1.008 (3), F.A.C.
XXX ("Corporation")
FEI #: XX
Dear:
This is in response to your letter dated September 23, 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 1211, 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 the Corporation does the production, which includes printing, of XXX
(Publication) on a monthly basis and each issue consists of an average of 59% advertising. You state that over 90%
of the 17,500 copies are distributed for free or mailed free to potential advertisers. The free distribution includes mail,
home delivery, rack machines, newsstands, or similar methods. You have enclosed three copies of the Publication for
our review. The Corporation produces the Publication for its publisher under a contract executed in 1998. Prior to that
time, the Corporation produced the Publication on its own behalf. You state that the Corporation has collected and
remitted sales tax on its printing charges to the current publisher.
ISSUE PRESENTED
Whether the Publication is exempt under the provisions of Section 212.08(7)(w), F.S.
TAXPAYER POSITION

You state in your letter:
... [The Publication] is published on a regular basis, is distributed mostly free of charge to the recipient by mail, home
delivery, rack machines, newsstands, or similar method, and fifty-nine percent of [the Publication] is composed of
advertisements. Therefore, we believe that [the Publication] qualifies for the sales tax exemption on the cost of
printing each of its editions, and no sales tax need be paid to [the Publication’s] printer for the printing of each edition.
You cite s. 212.08(7)(w), F. S., and Rule 12A-1.008 (3), F.A.C., for support of your position.
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 1, 1997.
Section 213.756, F.S., provides:
Funds collected from a purchaser under the representation that they are taxes provided for under the state revenue
laws are state funds from the moment of collection and are not subject to refund absent proof that such funds have
been refunded previously to the purchaser.
Rule 12A-1.014(3), F.A.C., provides:
(3) Whenever a dealer credits a customer with tax on returned merchandise or for tax erroneously collected, the
dealer must refund such tax to the customer before the dealer's claim to the State for credit or refund will be approved.
12A-1.008 (3), F.A.C., provides:
(3)(a) Periodicals that meet the following requirements are exempt from tax:

1. The periodical is published on a regular basis;
2. The periodical is distributed free of charge to the recipient by mail, home delivery, rack machines, newsstands, or
   similar method; and
3. 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.

The Publication is distributed on a regular basis, free of charge, through the mail. It consists primarily of advertising.
An exemption provided by s. 212.08(7)(w), F.S., applies to publications like this one. One requirement is that they be
primarily advertising. A review of the sample copies submitted indicates the Publication is primarily advertising;
therefore, it does qualify for the exemption for copies that are distributed free. The Corporation can accept an
exemption certificate offered by the publisher, as provided by Rule 12A-1.008(6)(b), F.A.C., and Rule 12A-1.038(5),
F.A.C. Copies of Rule 12A-1.008, F.A.C., and Rule 12A-1.038, F.A.C., are enclosed.
We must caution you, however, that this conclusion is based on the examination of the sample copies. The exempt
publication will need to continue to meet the requirements set forth in section 212.08(7)(w), F.S., in order for the
exemption to continue.
The Corporation is not entitled to a refund or credit of any tax collected from the publisher, unless the tax is first
refunded to the publisher. In Blackshears II Aluminum v. Department of Revenue, 641 So.2d 928 (Fla. 5th DCA 1994),
the court indicated that a vendor that erroneously collected taxes could either return them to the customer or remit
them to the state. In such an event, the provisions of s. 213.756, F.S., and Rule 12A-1.014(3), F.A.C., both cited
above, are applicable. Refunds and credits are subject to a time limitation under s. 215.26, F.S. As a result, only tax
paid in the 36 months preceding the application for refund or taking of a credit is available for refund.
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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