Did distributing a magazine to dues-paying association members make part of their dues taxable as a subscription charge?

Subject

Publications Received by Members Paying Dues to Associations

Plain-English summary

No portion of the membership dues became taxable merely because the association distributed its monthly magazine to members. Every member received it, no stated or implied dollar amount of the dues paid for it, and neither members nor nonmembers could purchase it separately.

That did not make production tax-free. Because the association's distribution was not a taxable retail sale, it had to pay sales tax on copies bought from a printer or use tax on its own self-fabrication costs.

What this means for you

The Department separated the tax treatment of member dues from the association's production costs. A separately priced subscription, extra-copy charge, or nonmember sale could turn the publication distribution into a taxable sale.

Common questions

Q: Did the association collect tax on any part of member dues? No.

Q: Did the association owe tax when buying printed copies? Yes, because it was consuming the copies rather than reselling them under the stated facts.

Q: What if the magazine were sold separately? A specified extra-copy, subscription, or nonmember charge would fall under the taxable-sale rules quoted in the TAA.

Citations and references

• Fla. Admin. Code r. 12A-1.008(2)(e) — association publications and membership dues
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-073

Original ruling text

Dec 02, 1993

Re: Technical Assistance Advisement 93(A)-073
Sales Tax - Publications Received by Members Paying Dues to
Associations
Petitioner: XXX (herein the "Association")
XXX (herein the "Magazine")

Dear :

This response is in reply to your October 5, 1993, petition for
the Department's issuance of a Technical Assistance Advisement
("TAA") pursuant to s. 213.22, F.S., concerning the captioned
matter and parties. Your petition 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.
Therefore, the Department is herewith granting your request for
the issuance of a TAA and the ensuing discourse shall embody
said ruling.

DISCUSSION OF FACTS

Your petition and supporting documents impart the following
significant information regarding the issues under advisement
herein:

FROM YOUR PETITION

"The [Association] requesting this TAA is an association
that publishes a magazine, [the Magazine], that it
distributes to its members. Each member is entitled to
receive the [Magazine]. There is no specific
understanding, express or implied, that a specific dollar
amount of each member's dues is for the [Magazine]. The
[Magazine] is not sold to either members or nonmembers.

"The [Magazine] specifies that a member is entitled to
receive the [Magazine] and that there is no specific dollar
amount of each member's dues which is paid for or received

by the [Association] for the [Magazine]."

FROM THE EXHIBIT MAGAZINE

A careful examination has been made of the sample pages (front
cover and page 3) of Volume 9, Number 9, September 1993, of the
Magazine. No subscription amount is shown on either of these
pages. Additionally, page three contains the following express
language:

"[The Magazine] is published monthly by the [Association].
This [Magazine] is provided to members of the
[Association]. No specific amount of your dues, either
expressed or implied, is for this [Magazine]. This
[Magazine] is not a available for purchase by either
[Association] members or nonmembers."

FROM OUR OCTOBER 22, 1993, TELEPHONE CONVERSATION

You were able to confirm in our October 22, 1993, telephone
conversation that the Magazine is distributed to members via
third class bulk mailing. You further advised that it is your
understanding that United States Postal Service regulations do
not require that a publication have paid subscriptions in order
to be eligible for third class mailing as is required for a
publication to qualify for the "general publication" second
class mailing rate pursuant to E221.2.4, "Circulation Standards,
Dues or Contributions, Domestic Mail Manual." I was able to
corroborate your understanding as accurate by way of my October
22, 1993, telephone conversation with XXX of the United States
Postal Service. XXX confirmed that third class bulk mailing
privileges, unlike "general publication" second class mailing
privileges, do not require that the publication have paid
subscribers.

REQUESTED ADVISEMENT

You favor a reply in essence affirming that the Association's
distribution of the Magazine under the instant facts does not
cause any portion of the membership dues to become susceptible
to sales or use tax as an express or implied subscription charge

for the Magazine.

DISCUSSION OF LAW

The operative rule governing the matter under advisement is Rule
12A-1.008(2)(e), F.A.C., which states:

"(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.
"3. When distribution of copies of an association's
magazine, newspaper, newsletter, or other publication is
subject to sales tax, as provided in subparagraph 1., it
can purchase those copies from a printer or other producer
without payment of sales tax if it presents its printer or
other producer a resale certificate; and, if the
association prints or otherwise produces copies itself, it
is not subject to use tax on its self-fabrication costs.
"4. When distribution of copies of an association's
magazine, newspaper, newsletter, or other publication is
not taxable, as provided in subparagraph 2., 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."
(Emphasis Supplied)

FINDING

Inasmuch as the instant facts support that there is no
understanding, express or implied, that a specific amount of the
dues paid by each of the Association's members is for the
Magazine, the Department hereby enters its finding that by the
authority of Rule 12A-1.008(2)(e)2., F.A.C., the Association's
distribution of the Magazine under the given facts and
circumstances does not cause any portion of the members' dues to
become subject to sales or use tax. Therefore, the
Association's distribution of the Magazine under the facts and
circumstances presented does not give rise to an obligation on
the part of the Association to collect and remit tax on any
portion of the membership dues. These findings are limited in
application to Volume 9, Number 9, September 1993, and
succeeding issues of the Magazine and remain valid only so long
as there is no alteration of the facts and circumstances which
would lead to a different determination.

Moreover, as the Magazine is viewed as not taxable under Rule
12A-1.008(2)(e)2., F.A.C., the Association must pay tax on the
purchase price and/or the fabricated cost of the Magazine
pursuant to Rule 12A-1.008(2)(e)4., F.A.C.

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,

Daniel M. Wagner, Jr.
Tax Law Specialist

DW/
Control No. 11311