Was a separately stated newspaper carrier-delivery charge subject to Florida sales tax when subscribers could avoid it?

Plain-English summary

Florida ruled that a daily-newspaper publisher did not have to collect sales tax on its independent-carrier delivery charge under the proposed subscription system.

Transportation charges included in a taxable sale are normally part of sales price. The cited rule excluded transportation when the charge was separately stated and could be avoided solely by the purchaser's decision or action.

The publisher offered carrier delivery, pickup at its distribution center, or mail delivery. At the initial subscription or renewal, notices and sales representatives disclosed carrier and mail delivery charges and told subscribers they could avoid the carrier cost by choosing pickup or mail. The carrier charge was separately stated on the invoice. Those facts satisfied the rule.

What this means for you

Separately stating delivery is only half the test. The customer must have a real, disclosed way to avoid the charge through their own choice.

Common questions

Was the carrier-delivery charge taxable? No, under the reviewed procedures.

Could subscribers avoid it? Yes, by choosing distribution-center pickup or mail delivery.

Would a bundled or mandatory delivery charge qualify? The ruling's exclusion depended on separate statement and avoidability.

Citations and references

• Fla. Stat. §§ 212.02 and 212.05, and Fla. Admin. Code r. 12A-1.045, as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10A-015

Original ruling text

SUMMARY
QUESTION: Whether newspaper delivery charges are subject to sales tax when the charge is
separately stated and can be avoided by the customer?
ANSWER – Based on Facts Below: No. 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 newspaper at a distribution center or to receive the newspapers by mail; and 3) the carrier
delivery charge is separately stated on the invoice.
April 9, 2010
XXX
Re:

Subject: Technical Assistance Advisement (TAA) 10A-015
Sales and Use Tax – Newspaper Delivery Charges
Sections 212.02 and 212.05, Florida Statutes (F.S.)
Rule 12A-1.045, Florida Administrative Code (F.A.C.)
XXX (Taxpayer)
FEI #: XXX

Dear XXX:
This is in response to your letter dated January 28, 2010, requesting this Department’s issuance
of a Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule
Chapter 12-11, F.A.C., concerning transportation charges. An examination of your letter has
established you have complied with the statutory and regulatory requirements for issuance of a
TAA. Therefore, the Department is hereby granting your request for 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
In your letter dated January 28, 2010, you provided that Taxpayer is a newspaper publisher, who
publishes a daily newspaper. Taxpayer is implementing a new subscription system, in which
subscribers have three delivery options at the commencement or renewal of a subscription
period. These options are:

Technical Assistance Advisement
Page 2 of 4

(1) Delivery by carrier.
(2) Pick up at the distribution center.
(3) Mail delivery.
You provided the following documents proposed to be used by the Taxpayer in its business
operation, along with a brief explanation on the use and purpose of each:
(1) “XXX Customer Notice.” This is a notice sent to a new or renewing subscriber who
pays by bank debit to notify the subscriber that the subscription will automatically
renew unless the Taxpayer is notified that the subscriber wants to cancel or change
their service.
The notice provides the rate per month, and separately states the sales tax and
transportation charges included in the rate. It also states “[y]ou may pick up your
newspaper at our … Plant between 2AM & 5AM to avoid the transportation cost or
you may have it mailed.”
(2) “Renewal Notice.” This is a notice that is sent to a renewal subscriber to notify the
subscriber that they need to pay one of the suggested amounts to continue service.
The notice provides that the rates will remain a certain amount per month, which
includes sales tax and transportation fee. It provides subscribers with an option to
pick up their newspaper at [Taxpayer’s address], between 2AM and 5AM or to
receive it by mail to avoid the transportation cost.
You further provided the following in a fax on March 8, 2010:
We typically do not use price point advertising and our customer service representatives
and telemarketers are trained to inform all customers of the unfettered choice option as
well as the breakdown of transportation fees and tax. Attached is a copy of that verbiage.
Over 90% of our customers speak to a telemarketer or customer service representative
when purchasing a subscription.
The telemarketers are instructed to inform the customers regarding the breakdown of the
subscription cost, including tax, delivery costs, and delivery options.
Requested Advisement
Taxpayer requests that the Department determine that the Taxpayer’s procedure described herein
on or after February 1, 2010, and setting out the charge for delivery and applicable sales tax of a
subscription will not be subject to sales tax.

Technical Assistance Advisement
Page 3 of 4

Applicable Authority and Discussion
Section 212.05, F.S., provides that it is the legislative intent that the business of selling tangible
personal property is a taxable privilege. The tax is imposed on the sales price of each item or
article of tangible personal property when sold at retail in this state. Section 212.05(a)1.a., F.S.
Sales price is the total amount paid for tangible personal property plus any services that are part
of the sale. Section 212.02(16), F.S. Rule 12A-1.045, F.A.C., provides that transportation
charges which are included in the sales price, but not separately stated, are subject to tax.
“Transportation charges” include carrying and delivery charges. Id.
Rule 12A-1.045(4), F.A.C., provides that transportation service 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.
   In this case, the charge is separately stated on the renewal notice and on the XXX postcards. The
   notices provide the total subscription amount, with the separately stated sales tax and
   transportation charges. The subscribers are informed through the notices or telemarketers that
   the transportation charge may be avoided if the subscribers pick up the newspaper at the plant or
   choose to have the subscription mailed to them. The notices provided to the subscribers and the
   instructions to the telemarketers show that the transportation charge is separately stated and that
   the charge can be avoided by a decision or action solely on the part of the purchaser; hence, the
   transportation charge is not subject to sales tax.
   Conclusion
   Pursuant to the facts you submitted in your correspondence, the Taxpayer is not required to
   collect sales tax on the charge for newspaper delivery by independent carriers given that, at the
   time of the initial subscription or subsequent renewal, the Taxpayer 1) informs the subscriber of
   the carrier delivery charge and mail delivery charge, 2) informs the subscriber that the delivery
   charge can be avoided by an election to either pickup the newspapers at a distribution center or
   receive the newspapers by mail, and 3) separately states the amount of the carrier delivery charge
   on the invoice.
   This response constitutes a Technical Assistance Advisement under section 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 section 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 that expressed in this
   response.

Technical Assistance Advisement
Page 4 of 4

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 section 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,

Angel Sessions
Senior Tax Attorney
Technical Assistance and Dispute Resolution
(850) 922-4708
Record ID: 79153