Did a free monthly publication averaging about 52% advertising qualify for Florida's sales-tax exemption for primarily advertising publications?

Subject

Publications, Free/Primarily Advertising

Plain-English summary

The Department denied the exemption in this revised ruling, but the official page marks the ruling obsolete because of a later policy change. On the record then presented, the publication averaged about 52% advertising, and the Department concluded that it was not "primarily advertising" under the free-publication exemption.

The publisher distributed about 60,000 monthly copies, with only about 100 mailed to fee-paying subscribers. Nine issues ranged from 34% to 64% advertising. The Department compared those figures with cases involving advertising giveaways and newspapers and concluded that approximately 52% did not make advertising the publication's primary purpose.

Because the publication did not qualify, this revision did not allow the publisher to avoid sales tax on its printing costs. The official status line later declared the ruling obsolete and identified TAA 93A-056 as the policy-change reference.

What this means for you

This page records the Department's May 1993 analysis, not a current rule to follow. The Department itself withdrew its policy value only three months later. Anyone classifying a free publication must use the later policy and current law rather than this obsolete percentage analysis.

Common questions

Q: Did the Department consider 52% advertising enough in this ruling? No.

Q: Did free distribution alone create an exemption? No. The ruling also required the publication's content to be primarily advertising.

Q: Can this ruling be relied on today? No. Its official status expressly says it is obsolete due to a policy change.

Citations and references

• Fla. Stat. § 212.08(7)(w) — free shoppers and community newspapers
• Fla. Admin. Code r. 12A-1.008(1)(g) — advertising-purpose presumption
• § 93, ch. 90-132, Laws of Fla. — cited expansion effective July 1, 1991
• Szabo Food Services, Inc. v. Dickinson, 286 So. 2d 529 (Fla. 1973)
• Green v. Home News Publishing Co., Inc., 90 So. 2d 295 (Fla. 1956)
• Department of Revenue v. Skop, 383 So. 2d 678 (Fla. 5th DCA 1980)
• Campus Communications v. Department of Revenue, 473 So. 2d 1290 (Fla. 1985)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 92A-063R

Original ruling text

Title:

Publications, Free/Primarily Advertising

Status: Obsolete - Policy Change - Ref. TAA 93A-056, 8/13/93.

May 07, 1993

RE: TAA 92A-063R
Request for revision of TAA# 92A-063
Sales and Use Tax; Free publications which are primarily
advertising
Section 212.08(7)(w), F.S.
Rule 12A-1.008(1)(g), F.A.C.

Dear :

This is in response to your letter of September 14, 1992,
wherein you requested that Technical Assistance Advisement (TAA)

92A-063, dated September 3, 1992, be revised based on

additional information provided in your letter and nine sample
copies of your client's publication. Your original request for
a TAA on behalf of your client stated in significant part the
following.

"At the present time, the taxpayer issues 60,000 copies of
a monthly periodical through the mail and various business
establishments. Approximately 100 copies are mailed to
subscribers who pay a fee, which represents a portion of
the cost of postage and handling.

"The taxpayer would like to conform to the provision of
F.S. 212.08(7)(w) in order to avoid the payment of sales
tax to the printer on a monthly basis.

"Should it be necessary to conform to the letter of the
law, the current subscribers could be billed `postage and
handling' only or the subscription fee could be eliminated
completely.

"With regards to the definition of `the content of which is

primarily advertising' the question we have for you is as
follows. Normally the space devoted to advertising will be
greater than 50% of the available space. Occasionally an
advertiser will pull an ad just prior to publication and
the space dedicated to advertising will dip below 50%. On
other occasions the cost of printing will be cheaper if the
periodical is larger. In order to take advantage of this
price savings the space devoted to advertising may once
again drop below 50%. Normally, the content will be
primarily advertising.

"Please provide advice as to whether or not these
variations in advertising space will be considered a
violation of the `primarily advertising' aspect of the
statute.

"The last item we request advice about is whether the
company is entitled to refunds of sales tax previously paid
to the publisher. If necessary we will gladly refund all
money received as `subscriptions' in prior periods. As a
corollary, can we become exempt from sales tax by issuing
refunds to subscribers on a pro rata basis and provided all
copies free of charge."

REVIEW OF PRIOR DETERMINATION

In Szabo Food Services, Inc. v. Dickinson, 286 So.2d 529,
530, (Fla. 1973), the Florida Supreme Court held that:
"Exemptions to taxing statutes are special favors granted by the
Legislature and are to be strictly construed against the
taxpayer." The Court further held that the taxpayer who claimed
that his transactions were exempt "must clearly show that" they
fell "within the exemption, with any doubt being resolved in
favor of the State."

An examination of two sample copies of your client's
publication revealed that approximately half of the content was
devoted to advertising. Since it could not be clearly
demonstrated that your client's publication was "primarily
advertising," your client's request for exemption pursuant to
Section 212.08(7)(w), F.S., was denied. Further, since your

client's publication did not qualify for the exemption, your
client would not be entitled to a refund of previously paid
sales tax on monthly printing costs.

CURRENT REQUEST FOR REVISION OF TAA #92A-063

Your request for revision of TAA# 92A-063 now provides the
following:

"The following is a summary of our last nine issues,
reflecting advertising pages and advertising percentages.

"MONTH

AD PAGES TOTAL PAGES PERCENT ADS

"JANUARY

19.30

56

34

"FEBRUARY

21.75

56

39

"MARCH

35.10

64

55

"APRIL

34.90

64

55

"MAY

44.67

76

59

"JUNE

35.25

60

59

"JULY

24.92

56

45

"AUGUST

39.25

"SEPTEMBER

72

43.25

55
68

64

"Magazines, generally speaking, need to run about 55
percent advertising in order to be profitable. Much lower,
and the CPM (cost per thousand) will have to be higher than
advertisers will find affordable for their return on
investment. And the magazine will fail. Much higher than
60 percent, readers will begin to balk at the high
advertising to editorial ratio, stop reading it, and voila,
the advertisers will no longer get results. And the
magazine will fail.

"So, generally speaking, publishers try to get as close to
60 percent as they can on a fairly regular basis without
crossing it too often....

"In the numbers above, you will see the company make the
transition from a start-up, money losing publication to a
magazine beginning to run off its own cash flow. With the
exception of the July issue -- during the slow summer --

the company has charted a steady course to profitability.

"With this additional information in hand, I believe the
determination reflected in [TAA# 92A-063] should be
revised."

RELEVANT AUTHORITY

The following passages from the Florida Statutes (F.S.) and
the Florida Administrative Code (F.A.C.) are pertinent to the
issues raised in your letters.

Section 212.08(7)(w), F.S., provides:

"Newspapers, shoppers, and community newspapers. - Likewise
exempt are newspapers. Also exempt are free, circulated
publications which are published on a regular basis, the
content of which is primarily advertising, and which are
distributed through the mail, home delivery, or
newsstands."

Rule 12A-1.008(1)(g), F.A.C., provides in part:

"For the purposes of the newspaper exemption..., if more
than 75 percent of the publication's copy was devoted to
advertising in more than one-half of the published editions
during any 12-month period, said publication's primary
purpose will be presumed to have been advertising and not
the dissemination of news...."

DETERMINATION

Effective July 1, 1991, Section 93 of Chapter 90-132, Laws
of Florida, amended Section 212.08(7)(w), F.S., by expanding the
exemption allowed newspapers to include publications ("shoppers"
and "community newspapers") which are primarily advertising and
are distributed free of charge. Your client seeks to come under
the purview of this statute and thereby avoid paying sales tax
to the printer.

Based on the data that you provided, your client's

publication contains an average of approximately 52 percent
advertising per issue. The statutes do not provide any
quantitative or qualitative guidelines as to what constitutes
"primarily advertising." However, the courts have examined the
issue of advertising content in publications which considered
themselves newspapers in Green v. Home News Publishing Co.,
Inc., 90 So.2d 295 (Fla. 1956), Department of Revenue v. Skop,
383 So.2d 678 (5th DCA 1980), and Campus Communications v.
Department of Revenue, 473 So.2d 1290 (Fla. 1985).

A free publication called the "Shopper Advertiser" was
examined by the Supreme Court of Florida in Green. In that case
Justice Roberts said in part:

"It [Shopper Advertiser] is apparently intended for
circulation in XXX, since those words appear at the top of
each page and the advertising is limited to businesses in
those areas. In one 12-page issue of the paper, one full
page was devoted to news of local governmental affairs in
XXX. Various items of household hints, recipes, advice to
parents, and the like, were spotted on other pages and
would consume, altogether, almost a page of the
publication. The remainder was devoted entirely to
advertising. In a 16-page issue, one full page was again
devoted to local governmental affairs, and except for one
item (a recipe), the remainder was advertising.
...
"The Shopper Advertiser' unquestionably has for its principal purpose the advertising concerns in the area and not the dissemination of news. It is, in practical effect, simply an advertisinggive-away,' even though a modicum of
local news and other material found in newspapers is
included." Green v. Home News Publishing Co., Inc., at 296.

A free publication called "Metro News" was examined by the
District Court of Appeal of Florida, Fifth District, in Skop.
In that case Judge Orfinger said in part:

"A review of the publications submitted in evidence here
make it difficult to find any distinction between the
Metro News' sub judice and theShopper Advertiser' in

Green. Of the samples reviewed by this court,
approximately 85% of the publication was devoted to
advertising. Of the remaining approximately 15%, some of
it was devoted to local news and some to recipes,
horoscopes and the like. We must therefore hold, as did
the Supreme Court in Green, that the Metro News
unquestionably has for its principal purpose the
advertising of business concerns in the area and not the
dissemination of news. Although perhaps not called a
`shopper', it is in practical effect simply an advertising
giveaway." Department of Revenue v. Skop, at 680.

Finally, in Campus the Supreme Court of Florida examined
the content of a free publication called "The Alligator". In
that case Justice Erlich said in part:

"... [T]he question is whether the primary purpose of the
publication is the dissemination of news or the advertising
of business concerns... We agree with the trial and
district courts that The Alligator is a `newspaper' within
the common sense of the word. Relevant factors supporting
this conclusion include... the relatively low percentage of
space devoted to advertisements (under 55% during the
period for which tax was assessed, well below the national
newspaper average of 63% cited by The Alligator )." Campus
Communications v. Department of Revenue, at 1293.

In consideration of the above, we now know that the courts
find that publications with advertising percentages of greater
than 85 percent are considered to be advertising giveaways. We
also know that a publication can have from 55 ("relatively low")
to 63 percent of its content as advertising and not be
considered an advertising giveaway. You have also submitted
that in order to not lose readers, magazines (publications that
people read for the editorial content) need to stay below 60
percent in advertising content. Therefore, it is the
Department's position that your client's publication, with an
advertising content of approximately 52 percent, is not
"primarily advertising" and not entitled to the exemption
provided by Section 212.08(7)(w), F.S.

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
expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of Section 213.22,
F.S. Your name, address, and any other details which might lead
to identification of the taxpayer must be deleted by the
Department before disclosure. In an effort to protect the
confidentiality of such information, we request you notify the
undersigned in writing within 15 days of any deletions you wish
made to the request or the response.

Sincerely,

JEFFERY L. SOFF
Tax Law Specialist
Statutory Compliance

encl.
ctrl# 4481