Were two regularly published, free, primarily advertising magazines exempt from Florida sales and use tax?

Plain-English summary

The two publications were exempt from Florida sales and use tax based on the issues the Department reviewed. Section 212.08(7)(w) and Rule 12A-1.008(3) exempted a periodical when it met three requirements:

1. it was published on a regular basis;
2. it was distributed free of charge by mail, home delivery, newsstands, or a similar method; and
3. its content was primarily advertising.

The publisher produced two magazines. The Department found that both were distributed regularly and free through the mail and, assuming the samples were representative, consisted primarily of advertising.

The exemption was issue-specific

The Department cautioned that each issue stands on its own. The publications had to continue being primarily advertising and continue using qualifying free-distribution methods for the exemption to continue.

Without the exemption, section 212.06(16) generally treated a publisher's own use or giveaway copies as taxable at their retail price, if any, or cost price. The ruling also noted that taxpayers must keep records demonstrating entitlement to an exemption and that insufficient records can result in an assessment.

What this means for you

A publisher should test every issue against all three requirements and retain distribution, circulation, advertising-content, and printing records. A title that qualified based on sample issues can lose the exemption if a later issue is no longer primarily advertising or is not distributed through a qualifying free method.

Common questions

Q: What made the publications qualify?
A: They were published regularly, distributed free through the mail or similar methods, and were primarily advertising based on the samples reviewed.

Q: Was the exemption permanent for the publication titles?
A: No. Each issue had to qualify on its own.

Q: What records mattered?
A: Records sufficient to demonstrate the publication met the exemption requirements, including its distribution and advertising content.

Citations and references

• Fla. Stat. § 212.05 — tax on retail tangible personal property
• Fla. Stat. § 212.06(16) — publisher use and giveaway copies
• Fla. Stat. § 212.08(7)(w) — qualifying free advertising publications
• Fla. Stat. § 212.13(2) — exemption-supporting records
• Fla. Admin. Code r. 12A-1.008(3) — exempt periodicals

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 05A-010

Original ruling text

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

February 7, 2005

Re: Technical Assistance Advisement 05A-010
Sales and Use Tax - Shoppers
Sections 212.05, 212.06(16), 212.08(7)(w), F.S.
Rule 12A-1.008(3), F.A.C.
Dear:
This is in response to your letter dated November 8, 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 the Corporation is the publisher of two magazines. These two
publications, XXX (Publication A) and XXX (Publication B), are published on a regular basis and each issue contains
advertising. In the 2004 "MJ" issue of Publication A, you published approximately 18,249 copies and 13,585 were
distributed for free or mailed free to potential advertisers. In the 2004 "JJ" issue of Publication B, you published
approximately 21,931 copies and 19,526 were distributed for free or mailed free to potential advertisers. The free
distribution includes mail, placement in hotels and real estate offices, or similar methods. You have provided two
copies of Publication B and three copies Publication A for our review.
The Corporation has accrued use tax on all the printed magazines, with the exception of the ones distributed to local
newsstands for resale. The publications have a subscription price of $24.95/year, and the paid subscriptions were 245
copies for Publication A and 95 copies for Publication B.
At a meeting on January 24, 2005, you provided additional information, including the advertising content of the issues
of Publication A published in 2001, 2002, 2003, and 2004. You state that most issues have 50% or greater
percentages of advertising.

ISSUE PRESENTED
Whether the Publications are exempt under the provisions of Section 212.08(7)(w), F.S.
TAXPAYER POSITION
You state in your letter:
[The Corporation] believes it meets all criteria [of Rule 12A-1.008, F.A.C.]

1. The periodical[s] [are] published on a regular basis....
2. The periodical[s] [are] distributed free of charge to the recipient by mail....
3. The content of the material is primary advertising....
   ... [The Corporation] requests a review... to determine if the content is "primarily advertising," and therefore, entitles
   [the Corporation] to receive a sales tax exemption on either of these periodicals.
   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.
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.
   Each issue will stand on its own in the determination of whether or not it meets the requirements of the exemption.

Taxing statutes are strictly construed against the taxing authority, and statutes granting exemptions are strictly
construed against the taxpayer. See Asphalt Payers v. Dept. of Revenue, 584 So.2d 57 (Fla. 1st DCA 1991) (citing
the rule that exemptions from tax are strictly construed against the taxpayer with any ambiguity resolved in favor of the
administrative agency); State ex rel. Szabo Food Services. Inc. v. Dickinson, 286 So.2d 529 (Fla. 1973)(noting that
although taxing statutes are strictly construed against a taxing authority, under Florida law exemptions are strictly
construed against the taxpayer); United States Gypsum Co. v. Green, 110 So.2d 409 (Fla. 1959)(also stating that
exemptions from tax are strictly construed against the taxpayer). Taxpayers are required to maintain records
demonstrating entitlement to exemptions from tax. Section 212.13(2), F.S. Insufficient or incomplete records result in
an assessment for unpaid tax.
Publication B and Publication A are distributed on a regular basis, free of charge, through the mail. An exemption
provided by s. 212.08(7)(w), F.S., applies to publications like this one. Assuming you have provided representative
samples, Publication A and Publication B consist primarily of advertising. Assuming that you continue to publish these
publications with primarily advertising and they are distributed through the mail, or similar methods, they satisfy the
requirements provided in Section 212.08(7)(w), F.S., and are exempt. We must caution you, however, that this
conclusion is based on the examination of the sample copies. The exempt publications 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.
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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