Did a glossy monthly publication distributed mostly free, but also sold by annual subscription, qualify for Florida's shopper or community-newspaper exemption?

Plain-English summary

The glossy monthly publication did not qualify as an exempt shopper or community newspaper.

About 60% to 70% of each issue was advertising, and the balance included community news and features. Most copies were distributed locally without charge, but the publisher also sold annual subscriptions.

The Department emphasized that the publication appeared monthly rather than daily or weekly, was repeatedly described as a magazine, used glossy paper associated with magazines, and offered annual subscriptions. It therefore failed the stated shopper and community-newspaper criteria.

The publisher had to collect sales tax on subscriptions delivered to Florida destinations and owed use tax on the printing cost of copies distributed free in Florida.

What this means for you

Advertising percentage alone did not establish the exemption. Publication frequency, format, subscriptions, and the publication's own presentation all mattered.

Common questions

Q: Did the publication contain enough advertising?
A: It reported 60% to 70% advertising, but that did not overcome the other failed criteria.

Q: Why did the Department call it a magazine?
A: It was monthly, sold annual subscriptions, called itself a magazine, and used glossy paper.

Q: Were Florida subscriptions taxable?
A: Yes.

Q: Were free copies tax-free to the publisher?
A: No. The publisher owed use tax on their cost.

Citations and references

• Fla. Stat. §§ 212.05(1)(a)1.a. and (b), 212.08(7)(w) — sales and use tax and publication exemption
• Fla. Admin. Code r. 12A-1.008(2), (3), (4), and (10) — magazines, subscriptions, and shoppers
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95A-018

Original ruling text

May 04, 1995

Re: TAA 95A-018
Free Circulated Publication
Sections 212.05(1)(a)1.a. and (b), 212.08(7)(w), F.S.
Rule 12A-1.008(2),(3) and (10), F.A.C.

Dear

This is in response to your letter of March 15, 1995, in
which you requested the issuance of a technical advisement on
behalf of XXXX (hereinafter "Taxpayer"), as to whether the
publication styled XXXXX (copies of which were enclosed with
your letter; hereinafter "Publication") qualifies for the
exemption from sales and use tax provided by section
212.08(7)(w), F.S., for "shoppers" and "community newspapers."

Your letter provides in part:

"FACTS:

"Taxpayer, a Florida corporation, is the publisher and
distributor of [Publication]. Taxpayer distributes
approximately 60,000 copies of each issue of [Publication],
on a monthly basis, free of charge, primarily to
restaurants, hotels, retail outlets and residential areas
in and around XXXXX. Notwithstanding the fact that
[Publication] is distributed locally free of charge,
[Publication] offers an annual subscription of twelve
monthly issues for $28.00. There are currently 1,763 paid
subscribers of [Publication] in the United States and 60
foreign subscribers, The $28.00 annual subscription fee is
used solely to reimburse Taxpayer for costs of handling and
postage of the issues sent to subscribers. In addition to
a nominal allocation of the subscription fee to in-house
administrative costs, the remaining subscription fee is
paid directly to an outside mailing house and for postage.
Attached hereto as Exhibit 'A', is a Schedule setting forth

an allocation of the costs of postage and handling of
subscriptions, which indicates that the annual subscription
fee is expended by Taxpayer solely for costs of handling
and postage.

"Each issue of [Publication] contains approximately 60% to
70% of paid advertising of a broad range of products and
services offered by numerous unrelated businesses including
but not limited to: local real estate developers and
brokers; retail clothing, home furnishing and accessories
stores; malls; night clubs; entertainment attractions;
restaurants; and hotels. The balance of each issue of
[Publication] contains reports of current events and
matters of general interest which appeal to a wide spectrum
of the general public, including news of general and
community interests, editorial comments and articles,
including but not limited to: celebrity interviews with
personalties in the world of film, social events and
popular spots in and around XXXXX including parties, clubs,
restaurant openings, gallery openings and special events;
articles introducing new businesses and trends; features
dealing with international fashion; environmental reports
on the country's most current issues, including those
topics most relevant to Florida; a mini planner for the
month, giving readers information on events, new places,
music, food, books, etc[.]; and articles containing a
sampling of the best gifts from XXXX most popular shops and
boutiques.

"Analysis.

"Based upon the foregoing facts, Taxpayer respectively
requests a determination that [Publication] qualifies as a
shopper' and as acommunity newspaper' under FAC 12A1.008(10) and therefore the costs of printing and all
taxable purchases for the exclusive purpose of
incorporation into each issue are exempt from Florida sales
and use taxes.

"FAC Section 12A-1.008(10) provides an exemption from sales
tax for publications which qualify as either a 'shopper' or

'community newspaper.'

"The term `shopper' means a community newspaper made
available to its coverage area by way of distribution
through the mail, home delivery, or news stands, free of
charge, which is published on a regular basis (usually
daily or weekly) and which consists primarily of
advertising of a broad range of products and services
offered by several unrelated types of businesses or
individuals, and which has a conformity as to title and
general nature of content from issue to issue, and may
contain in each issue at least some news of general or
community interest, community notices, and also contain
editorial comments or articles by different authors. FAC
12A-1.008(10)(a).

"[Publication] qualifies as a `shopper' publication based
upon the above criteria for the following reasons:

"1. [Publication] is a community newspaper made available
to its coverage area by way of distribution through the
mail, home deliver, and news stands.

"2. [Publication] is distributed free of charge, with the
exception of a de minimis number of individual subscribers
who pay an annual subscription fee which is used solely to
reimburse Taxpayer for the costs of postage and handling.

"3. [Publication] is published on a regular monthly basis.

"4. [Publication] consists primarily of advertising of a
broad range of products and services offered by several
unrelated types of businesses.

"5. There is a conformity as to title and general nature
of content from issue to issue. Copies of several
successive issues of [Publication] are enclosed for your
review, and marked Exhibit 'B.'

"6. Each issue of [Publication] contains news of general
and local interest to the XXXX community and contains

editorial comments and articles by different authors.

"In addition to qualifying as a shopper' publication, [Publication] also qualifies as acommunity newspaper'
publication.

"The term `community newspaper' means a community
possessing the following attributes:

"1. Its circulation is free;

"2. It must be published at stated short intervals
(usually daily or weekly);

"3. It must not, when successive issues are put together
constitute a book;

"4. It must be intended for circulation among the general
public;

"5. It must consist primarily of advertising of a broad
range of products and services offered by several unrelated
types of businesses or individuals;

"6. It must routinely [devote] a minimum of 25% of its
copy to reports of current events and matters of general
interest which appeal to a wide spectrum of the public; and

"7. It must be distributed through the mail, home delivery
or news stands. FAC 12A-1.008(10(b).

"As stated above, [Publication's] circulation is free and
[it] is published on a regular monthly basis. Each issue
is separate and does not, when successive issues are put
together, constitute a book. (See the copies of
[Publication] enclosed as Exhibit `B')

"[Publication] is circulated to the general public, through
the mails and direct delivery to restaurants, hotels,
retail outlets and individual residences.

"Each issue of [Publication] consists primarily of
advertising as described above, and routinely devotes a
minimum of 25% of its copy to reports of current events and
matters of general interest which appeal to a wide spectrum
of the general public.

"In addition, [Publication] satisfies the primarily advertising' requirement of ashopper' or `community
newspaper,' since more than 50% of each issue is devoted to
advertising. FAC 12A-1.008(10)(c). Each issue of
[Publication] also satisfies the criteria to be considered
a 'newspaper' since each issue contains a minimum of 25%
news consisting of current events in matters of general
interest which appeal to a wide spectrum of the general
public."

APPLICABLE AUTHORITY

Section 212.05(1)(a)1.a., and (b), F.S., provides in part:

"212.05 Sales, storage, use tax.--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 in this state....
"(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:
"(a)1.a. At the rate of 6 percent of the sales price of
each item or article of tangible personal property when
sold at retail in this state, computed on each taxable sale
for the purpose of remitting the amount of tax due the
state, and including each and every retail sale....
"(b) At the rate of 6 percent of the cost price of each
item or article of tangible personal property when the same
is not sold but is used, consumed, distributed, or stored
for use or consumption in this state."

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

"(w) 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(10), F.A.C., provides in part:

"(10) Effective July 1, 1991, shoppers' andcommunity
newspapers' which satisfy the criteria provided in this
subsection are exempt from tax.
"(a) The term shopper' means a community publication made available to its coverage area by way of distribution through the mail, home delivery, or newsstands free of charge, which is published on a regular basis (usually daily or weekly) and which consists primarily of advertising of a broad range of products and services offered by several unrelated types of businesses or individuals, and which has a conformity as to title and general nature of content from issue to issue, and may contain in each issue at least some news of general or community interest, community notices, and could also contain editorial comment or articles by different authors. "(b) The termcommunity newspaper' means a community
publication possessing the following attributes:
"1. Its circulation must be free;
"2. It must be published at stated short intervals
(usually daily or weekly);
"3. It must not, when successive issues are put together,
constitute a book;
"4. It must be intended for circulation among the general
public;
"5. It must consist primarily of advertising of a broad
range of products and services offered by several unrelated
types of businesses or individuals;
"6. It must routinely devote a minimum of 25 percent of
its copy to reports of current events and matters of
general interest which appeal to a wide spectrum of the
general public; and
"7. It must be distributed through the mail, home
delivery, or newsstands.
"(c) In order to satisfy the `primarily advertising'

requirement of a shopper' orcommunity newspaper,' more
than 50 percent of the publication's copy must be devoted
to advertising in more than one-half of the published
editions during any 12-month period. However, in order to
be considered a newspaper, a community newspaper must carry
a minimum of 25 percent news consisting of current events
and matters of general interest which appeal to a wide
spectrum of the general public."

Rule 12A-1.008(2)(a), (b)1.,and (c), F.A.C., provides:

"(2)(a) Before July 1, 1987, subscriptions to magazines
entered as second class mail sold for an annual or longer
period of time were exempt from sales and use taxes; but
sales of single copies were taxable. Effective July 1,
1987, the purchase of or retail sale of magazines, whether
by subscription or as single copies, is taxable at the
retail price.
"(b)1. Subscriptions to newspapers, magazines and
periodicals are taxable when a copy or copies are
transported to a destination in this state. Such
subscriptions are not taxable when the point of destination
is outside this state. When the destination at the
beginning of the subscription is in this state, but is
later changed to outside this state, the subscription is
taxable. When the destination at the beginning of the
subscription is outside this state but is later changed to
inside this state, the subscription for its entire term is
not taxable.
"(c)1. Use tax is payable on the cost price of magazines,
handbills, circulars, flyers, advertising supplements, and
other printed materials when not sold but used, consumed,
or distributed by means other than being distributed as a
component part of a newspaper or magazine, or stored for
use or consumption in this state.
"2. The term `cost price' means the actual cost of printing
of newspapers, magazines, and other publications, without
any deductions therefrom on account of the cost of
materials used, labor or services cost, transportation
charges, or other direct or indirect overhead costs that
are a part of printing costs of the property. However, the

cost of labor to manufacture, produce, compound, process,
or fabricate expendable items of tangible personal property
that are directly used by such person in printing other
tangible personal property for sale or for his own use is
exempt. Authors' royalties, fees, or salaries, general
overhead and other costs not directly related to printing
shall be deemed labor associated with the manufacturing,
producing, compounding, processing, or fabricating
expendable items. For determining which elements are
included in cost price and how the tax is computed, see
Rule 12A-1.043(1)(b), (c), and (d), F.A.C."

Rule 12A-1.008(3) and (4), F.A.C., provides:

"(3)(a) For purposes of this rule, the term, `magazine.'
being a word of common usage, is to be construed in a plain
and ordinary signification and not in a technical sense.
"(b) Among other characteristics distinguishing a magazine
from a newspaper, magazines usually:
"1. are sold by subscription for longer periods of time
than newspapers;
"2. are published at longer intervals than newspapers,
such as weekly, monthly or longer;
"3. are delivered by mail or sold over the counter, but
copies may also be delivered to the ultimate consumer by
other means; and
"4. cannot qualify as newspapers in which legal notices
and process may be published pursuant to s. 50.031, F.S.
"(4) The tax on the sale of a subscription or copy of a
newspaper, magazine, or other publication must be
separately stated as Florida sales tax on the customer's
charge ticket, invoice, or other tangible evidence of
sale."

DEPARTMENT RESPONSE

We have reviewed the issues of the publication together
with the information contained in your letter and the applicable
sections of chapter 212, F.S., and rules of the Florida
Administrative Code to determine whether it qualifies for the
exemption from tax for "shoppers" and "community newspapers"

under section 212.08(7)(w), F.S., and Rule 12A-1.008(10), F.A.C.

Section 212.08(7)(w), F.S., constitutes a statutory
exemption, and the Department in construing its provision must
adhere to and be guided by the long-standing and fundamental
precept of statutory construction, established by the Florida
Supreme Court, which mandates that exemptions from or exceptions
to taxing statutes must be strictly construed against the
taxpayer. See Asphalt Pavers v. Dept. of Revenue, 584 So. 2d 57
(Fla. 1st DCA 1991); Dade Cty. Taxing Auth. v. Cedars of
Lebanon, 355 So. 2d 1205 (Fla. 1978), reh. den. April 5, 1978;
Williams v. Jones, 326 So. 2d 425 (Fla. 1975), reh. den. March
4, 1976; Straughn v. Camp, 293 So. 2d 689 (Fla. 1974); United
States Gypsum Company v. Green, 110 So. 2d 409 (Fla. 1959).

Focusing back on the exemption for certain free
publications granted by s. 212.08(7)(w), F.S., the Florida
Supreme Court's doctrine of strict construction of exemptions
would operate to confine said exemption to a publication which
can demonstrate under a strict construction that it naturally,
logically, and by clear connection falls into the category of a
"shopper" or "community newspaper".

Rule 12A-1.008(10)(a), F.A.C., provides among other things
that a publication seeking an exemption from tax as a "shopper"
must be circulated free of charge, and it must be published on a
daily or weekly basis. XXXX is published monthly and
subscriptions are offered and sold on an annual basis.
Additionally, the publication is referred to as a "magazine" on
the subscription order form, the masthead, TV-Radio Ads, letters
from the publisher, and the contents section of the publication.

Although the publication does satisfy some of the
requirements for a "shopper" as outlined in the rule, such as
consisting primarily of advertising of a broad range of products
and services, containing news of general or community interest
and editorial comments or articles by different authors, it does
not satisfy all of them. In addition to being referred to as a
"magazine," it is printed on glossy paper which is commonly used
by magazines companies. Therefore, it is the position of the
Department that Publication is not exempt from tax as a

"shopper" under section 212.08(7)(w), F.S.

It is also the Department's position that the publication
does not satisfy all the requirements of the rule in order to be
considered as a "community newspaper" which is exempt from tax.
Again, the publication is published monthly instead of daily or
weekly and subscriptions are offered and sold on an annual basis
in addition to its being referred to as a "magazine" in several
areas of the publication.

Since the publication does not qualify for the exemption
from tax under section 212.08(7)(w), F.S., and Rule 12A1.008(10), F.A.C., Taxpayer is responsible for charging,
collecting, and remitting sales tax on the sale of its
subscriptions which are transported to destinations in this
state. The publication would also be liable for use tax on the
cost of the copies of the publication which are distributed free
of charge.

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,

Richard S. Harrod
Technical Assistant

RSH/h
Control No.20424