Did a nonprofit association owe sales tax on journals included with dues when postal rules required a stated subscription price?

Subject

Periodicals

Plain-English summary

A journal included with membership dues was not a taxable member sale when no stated or implied part of the dues paid for it, but a separately stated subscription amount required for second-class mailing made that amount taxable. Members could not reduce dues by declining the journal, while members and nonmembers could separately buy subscriptions or copies.

For July 1, 1987 through July 1, 1993, a temporary remedial law also protected imputed member-publication charges when the association had not collected tax. After that period, the ordinary rule applied.

If the association used a mailing method that did not require a separately stated member price, its dues-included distribution remained nontaxable. Extra subscriptions or copies sold to members or nonmembers were taxable. When member distribution was nontaxable, the association still paid tax to its printer or use tax on self-fabrication costs.

What this means for you

The tax result depended on whether the association itself attached a specific amount to the member copy, even when the price statement existed to satisfy postal rules.

Common questions

Q: Was the journal included with dues automatically taxable? No.

Q: Did a stated second-class-mail subscription price matter? Yes. The ruling treated that stated member amount as taxable.

Q: Were separately sold subscriptions and copies taxable? Yes.

Citations and references

• Fla. Stat. § 212.05(1)(i) — magazines sold or used in Florida
• Fla. Admin. Code r. 12A-1.008(2)(e) — association publications
• Ch. 93-233, § 5, Laws of Florida — temporary remedial member-publication rule
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-063

Original ruling text

Sep 10, 1993

Re: TAA 93A-063
Sales and Use Tax on Periodicals Distributed to Association
Members
Rule 12A-1.008(2), F.A.C.

Dear :

This reply is to your letter dated July 2, 1993, written on
behalf of your client, XXX (hereinafter referred to as
"Association"), in which you requested the issuance of a
Technical Assistance Advisement, regarding the application of
sales tax on publications distributed by non-profit
associations. This response constitutes a Technical Assistance
Advisement under Chapter 12-11, Florida Administrative Code, and
is issued to you under the authority of s. 213.22, Florida
Statutes.

DISCUSSION OF FACTS

The following significant facts are recounted from your letter:

"[Association], such a non-profit association, publishes a
pharmacy journal entitled XXX' [hereinafterPublication']
through its subsidiary XXX [hereinafter `Journal'].
[Association] contracts with [Journal] to provide this
publication and budgets a yearly amount to be paid to [Journal]
based on the revenue needed to publish [Publication] minus the
amount received by [Journal] for advertising and for sales of
[Publication].

"Each dues paying member of [Association] receives a copy
of [Publication] without charge and there is no understanding
express or implied that a specific dollar amount of each
member's dues is for the publication.... For instance, members
cannot receive a reduction in their dues in exchange for not
receiving [Publication].

"[Association's] members and non-members may purchase an
annual subscription for XXX a year, or single copies in the
amount of XXX apiece...."

Your letter also provides information printed on the inside
cover of [Publication], in accordance with second class mail
postal regulations. This information contains the annual
subscription price, as well as the single copy price.

RELEVANT AUTHORITY

Section 212.05, F.S., states in part that every person is
exercising a taxable privilege who engages in the business of
selling tangible personal property in this state. Section
212.05(1), F.S., further provides that a tax is levied for such
privilege:

"(i) At the rate of 6 percent on the retail price of
magazines sold or used in Florida."

Rule 12A-1.008(2), F.A.C., provides in pertinent part:

"(e)1. If an association publishes a magazine, newspaper,
newsletter, or other publication, its distribution is a
taxable sale if:
"a. Copies are sent to members and there is an
understanding, express or implied, that a specific dollar
amount of each member's dues is for the publication, in
which event the sales price of the subscription or copy is
that amount;
"b. A member is entitled, for a specified extra charge to
order additional subscriptions or copies at a specified
charge, in which event the sales price is the amount of
that charge; or
"c. A non-member is permitted to subscribe or to purchase
copies for a charge, in which event the sales price is the
amount of that charge.
"2. If an association publishes a magazine, newspaper,
newsletter, or other publication, its distribution to its
members is not a taxable sale if each member is entitled to
receive it in return for payment of dues and there is no

understanding, express or implied, that a specific dollar
amount of each member's dues is for the publication...."

Section 5, Ch. 93-233, L.O.F. provides:

"(1) A nonprofit association which publishes a magazine,
newspaper, or other publication directed to its members
shall not be liable for sales or use tax on sales of such
publication to its members if:
"(a) The only charge to the member for the publication is
an imputed charge that is contained within the amount paid
as membership dues by the member to the association,
regardless of whether the association has established a
price for the publication in order to comply with postal
regulations; and
"(b) The association has not collected sales tax on the
transaction.
"(2) This section does not apply to subscriptions or single
copies sold to nonmembers of the association, or to
additional subscriptions or copies sold to members at a
specified charge.
"(3) This section shall take effect upon becoming a law,
shall be deemed remedial in nature and shall apply
retroactively to July 1, 1987, and shall remain applicable
to taxable periods through July 1, 1993." (Emphasis
supplied)

REQUESTED ADVISEMENT AND DEPARTMENT'S RESPONSE

[1] "Please confirm as correct that no sales tax is due for
those copies distributed to [Association] members without an
express or implied understanding that a specific dollar amount
of each member's dues is for [Publication]."

The correspondence from Mr. Jere N. Moore, Jr., Director of
Public Affairs, to which you refer in your letter, describes the
recent legislation cited above in Section 5, Ch. 93-233, L.O.F.,
which was deemed remedial in nature and applies only to the
period July 1, 1987, through July 1, 1993. Pursuant to this
provision, no sales tax would be due for publication charges
imputed in members' dues for the period July 1, 1987, through

July 1, 1993, provided no tax was collected. For such charges
subsequent to July 1, 1993, please refer to the response to your
second request.

[2] "Please also confirm as correct that under the current
regulatory scheme, after July 1, 1993 sales tax will not be due
on the distribution of [Publication] to the members of
[Association] as long as there is no understanding that a
specific dollar amount of the dues is for [Publication]."

An association's publication to its members is not a taxable
sale if each member is entitled to receive it in return for
payment of dues and there is no understanding, express or
implied, that a specific dollar amount of each member's dues is
for the publication. However, when distribution of copies of an
association's publication is not taxable, sales to it by a
printer or other producer of those copies are subject to sales
tax, based on their sales price; and if the association prints
or otherwise produces copies itself, it is subject to use tax on
its self-fabrication costs.

Further, regarding the delivery of [Association's] publication,
the United States Postal Service requires that in order to
qualify for second class mailing privileges, an organization
must separately state the amount paid by each member receiving
the publication in compliance with Section E221.2.4,
"Circulation Standards, Dues or Contributions, Domestic Mail
Manual." Therefore, if [Association] complies with this
requirement in order to qualify for second class mailing
privileges, the amount of each member's dues thus separately
stated as for [Publication] would be subject to sale tax.

[3] "If you determine that sales tax is due on the distribution
of [Publication] to dues paying members, would this distribution
not be taxable if a different mailing system were used which
does not require the publication of the subscription price?"

If a different mailing system is used, which does not require
the amount paid by each member to be separately stated, tax
would not be due on that distribution if no part of the members'
dues is expressed or implied to be for the publication. Tax

would be due, however, on any additional subscriptions or copies
sold to members or non-members.
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 and your request are
public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 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 confidential
information, we request you notify the undersigned in writing
within 15 days of any deletions you wish made to the request or
this response.

Sincerely,

Delores Overcash
Technical Assistant

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