Did an out-of-state nonprofit association have to register and collect Florida tax on publications mailed to members when it had no physical presence?

Subject

Publications of Membership Association/No Florida Nexus

Plain-English summary

Under the ruling's 1994 physical-presence analysis, Florida could not require the association to register or collect sales or use tax. Its only connection to Florida was resident members, and it had none of the listed Florida agents, locations, employees, property, inventory, delivery vehicles, or leased goods.

That collection immunity did not protect recipients from use tax on taxable property mailed into Florida. The ruling placed self-reporting responsibility on members and other recipients for the cost paid for publications and other items such as extra copies, books, cassettes, and videotapes.

What this means for you

This historical ruling separated the association's collection duty from the Florida recipient's use-tax duty. It also distinguished a publication included in dues with no allocated price from separately charged additional copies or nonmember subscriptions under the cited rule.

Common questions

Did Florida members alone create collection nexus? No, under the represented 1994 facts.

Was a regular publication included in dues necessarily a taxable sale? No. The cited rule said it was not a taxable sale when no express or implied specific dues amount was allocated to it.

Could separately charged copies be taxable? Yes. The rule treated specified extra charges and nonmember purchases as sales prices.

Citations and references

• Fla. Stat. §§ 212.05, 212.06(2)(b), 212.06(6), 212.06(8)(a), and 213.22
• Fla. Admin. Code r. 12A-1.008(2)(e)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94A-006

Original ruling text

Title:

Publications of Membership Association/No Florida
Nexus

Jan 13, 1994

Re: TAA 94A-006
Sales and Use Tax on Publications of Membership
Association Having No Florida Nexus
Sections 212.05, 212.06(2)(b), (6), (8)(a), F.S.
Rule 12A-1.008(2)(e), F.A.C.

Dear :

This is in response to your letter dated November 9, 1993,
written on behalf of your client, the 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

Your client is a XXX non-profit corporation, and the
following significant facts are recounted from your letter:

"The [Association] is an organization committed to
preserving the U.S. Constitution. The [Association]
neither has a `physical presence' nor a substantial nexus
with Florida. With regard to the issue of nexus:

"1) the [Association] does not have an agent in Florida
who solicits or transacts business on behalf of the
[Association] and as a result receives orders for
merchandise which will be delivered to the purchaser
in Florida;
"2) the [Association] does not have a physical location in

Florida;
"3) the [Association] does not deliver merchandise into
Florida in vehicles owned by [Association];
"4) the [Association] does not own land or buildings in
Florida;
"5) the [Association] does not store merchandise in
Florida for sale or use; and
"6) the [Association] does not rent or lease merchandise
that is located in Florida in the possession of a
lessee.

"Further, the [Association] has no employees in Florida and
it is not qualified to do business in Florida. Its only
association with Florida is that some of its members reside
in the State of Florida. These members, as a part of their
membership dues receive the [Association] Bulletin
(hereinafter referred to as the "Publication"), which is
distributed to members via the U.S. Mail. There is no
understanding, express or implied, that a specific dollar
amount of each member's dues is for the publication. A
copy of one of the [Publications] is enclosed for your
review."

From previous correspondence it was stated that a member of
the [Association] may sometimes order additional copies of the
[Publication] and will be charged an additional fee for the
copies and also, copies can be ordered by non members.

From the copy of the [Publication] provided with your
letter it is noted on the front that the
"Membership/Subscription" price is $25.00. There is also a
price list for ordering additional copies from 10 to 100 or
more. It is also noted that one can write for a list of books,
cassettes, and videotapes that may be purchased.

RELEVANT AUTHORITY

Section 212.05, F.S., provides:

"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." (Emphasis
Supplied)

Section 212.06(2)(b), F.S., provides:

"(b) The term `dealer' is further defined to mean every
person, as used in this chapter, who imports, or causes to
be imported, tangible personal property from any state or
foreign country for sale at retail; for use, consumption,
or distribution; or for storage to be used or consumed in
this state."

Section 212.06(6), F.S., provides:

"(6) It is however, the intention of this chapter to levy a
tax on the sale at retail, the use, the consumption, the
distribution, and the storage to be used or consumed in
this state of tangible personal property after it has come
to rest in this state and has become a part of the mass
property of this state."

Section 212.06(8)(a), F.S., provides in pertinent part:

"(8)(a) Use tax will apply and be due on tangible personal
property imported or caused to be imported into this state
for use, consumption, distribution, or storage to be used
or consumed in this state;..." (Emphasis Supplied)

Under the sales tax laws of Florida, persons who make sales
to a purchaser in this state are liable for collection of
Florida's sales tax if there is sufficient nexus with this
state. Nexus, in this state, is created when:

1) a dealer has agents in this state who solicit or
transact business on behalf of the dealer and as a

result receive orders for merchandise which will be
delivered to the purchaser in this state; or
2) a dealer has a physical location in this state; or
3) a dealer delivers merchandise into this state in
vehicles owned by the dealer; or
4) a dealer owns land or buildings located in this state;
or
5) a dealer stores merchandise in this state for sale or
use; or
6) a dealer rents or leases merchandise that is located
in Florida in the possession of a lessee.

If an out of state nonprofit association with Florida
members has nexus with this state based on the above criteria,
it becomes a dealer and is required to be registered with our
department and collect sales tax on the publication it
distributes to its members in Florida as provided by Rule 12A1.008(2)(e), F.A.C, which 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...."

DETERMINATION

Based on the information provided, inasmuch as no "physical
presence" has been established which would meet the "substantial
nexus" requirement, your client, [Association], would be immune
under the Due Process or Commerce Clauses of the United States
Constitution from the requirement to register for a sales and
use tax number and would, therefore, also not be required to
collect sales tax on the [Publication] it mails to its members
in the State of Florida.

You are hereby alerted to the fact that the described
immunity enjoyed by your client, [Association], under the
specified circumstances, would not extend to the members or
other persons within Florida who receive the [Publication] or
any other item of tangible personal property. Without violation
of either the Due Process or Commerce Clauses of the United
States Constitution, such persons are fully susceptible to the 6
percent use tax levied under Section 212.06, F.S., on the cost
price they pay for the publications received by mail from out of
state, as such publications do commingle with and become a part
of the general mass of property in this state and are for use or
consumption within Florida. Accordingly, the burden falls on
the members and other persons in Florida receiving such
publications to make a self declaration and remittance of the
use tax directly to this agency by use of Form DR-15MO, which is
available upon request from the department. Use tax will also
apply to any other tangible items mailed to residents of
Florida; i.e., videotapes, cassettes, or books.

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 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,

Sharon Blair
Technical Assistance

SB/pb
Enclosure
Con. #12000