Is separately stated U.S. postage for the delivery of direct mail subject to Nebraska sales or use tax?

Plain-English summary

If you run direct-mail campaigns -- catalogs, flyers, promotional mailers -- the U.S. postage on those mailings can be a big line item. This ruling answers whether Nebraska sales tax applies to the postage charge the mail house passes on to you.

The Department's answer: separately stated U.S. postage on direct mail is exempt, starting April 1, 2014. Nebraska law (Laws 2014, LB 867) amended the definitions of "sales price" and "delivery charges" so that a direct-mail seller's charge for U.S. postage is no longer part of the taxable price -- but only if the postage is separately stated on the invoice, bill of sale, or similar document given to the buyer.

Two limits matter:

1. Before April 1, 2014, the definition of "sales price" swept in all delivery charges, including U.S. postage, so postage on direct mail was taxable.
2. The exemption is narrow. It covers U.S. postage on direct mail only. Charges by the direct-mail seller for other forms of delivery are still taxable, and postage that is not separately stated stays buried in the taxable sales price.

"Direct mail" is defined broadly: printed material distributed by U.S. mail or another delivery service to a mass audience or to addressees on a purchaser-supplied mailing list, where the recipients are not billed for the items. It does not include multiple pieces of printed material delivered to a single address.

What this means for you

Direct-mail houses and printers

When you bill a customer for a direct-mail job, state the U.S. postage separately to keep it exempt. If you lump postage into a single "delivery" or "handling" charge, or bundle it into the price, it remains part of the taxable sales price. Your other delivery charges (non-postage) are still taxable.

Businesses buying direct-mail services

Expect the U.S. postage line to be tax-free if your vendor breaks it out separately on the invoice. If postage is not itemized, you may be charged tax on it, because it is treated as part of the overall taxable price.

Note on affected regulations

The ruling supersedes parts of Nebraska Sales and Use Tax Regs 1-007 (Gross Receipts Defined), 1-057 (Printing and Related Industries), and 1-079 (Delivery Charges) to the extent they don't reflect this postage exemption.

Common questions

Q: Is U.S. postage on direct mail taxable in Nebraska?
A: Not since April 1, 2014, provided the postage is separately stated on the invoice, bill of sale, or similar document. If it isn't separately stated, it remains part of the taxable sales price.

Q: Does the exemption cover all delivery charges?
A: No. It applies only to U.S. postage on direct mail. Other delivery charges by the seller of direct mail are still subject to sales and use tax.

Q: Does it matter what kind of direct mail it is?
A: No. The exclusion applies to all forms of direct mail, whether advertising and promotional direct mail or other direct mail.

Q: What counts as "direct mail"?
A: Printed material distributed by U.S. mail or other delivery service to a mass audience or to addressees on a purchaser-supplied mailing list, where the cost of the items is not billed directly to the recipients (Neb. Rev. Stat. § 77-2701.12). It excludes multiple items of printed material delivered to a single address.

Citations and references

• Neb. Rev. Stat. § 77-2701.11 -- defines "delivery charges" and excludes separately stated U.S. postage on direct mail.
• Neb. Rev. Stat. § 77-2701.12 -- defines "direct mail."
• Neb. Rev. Stat. § 77-2701.35 -- defines "sales price"; excludes separately stated U.S. postage on direct mail.
• Neb. Rev. Stat. § 77-2703(1) -- imposes sales tax on gross receipts from sales of tangible personal property, including direct mail.
• Laws 2014, LB 867 -- amended the "sales price" and "delivery charges" definitions effective April 1, 2014.
• Reg-1-007, Reg-1-057, Reg-1-079 -- superseded to the extent they do not provide for the U.S. postage exemption.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr011401_direct_mail_delivery.pdf

Original ruling text

Revenue Ruling 01-14-1

Sales and Use Tax

May 5, 2014

Delivery Charges for Direct Mail
This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue
(Department) until amended. A guidance document does not include internal procedural documents
that only affect the internal operations of the Department and does not impose additional requirements
or penalties on regulated parties or include confidential information or rules and regulations made in
accordance with the Administrative Procedure Act. If you believe that this guidance document imposes
additional requirements or penalties on regulated parties, you may request a review of the document.
This guidance document may change with updated information or added examples. The Department
recommends you do not print this document. Instead, sign up for the subscription service at revenue.
nebraska.gov to get updates on your topics of interest.

Issue
Are charges for U.S. postage for the delivery of direct mail subject to sales or use tax?

Conclusion
Beginning April 1, 2014, Neb. Rev. Stat. §§ 77-2701.11 and 77-2701.35 have been amended by the
provisions of Laws 2014, LB 867, to provide an exemption for charges by sellers of direct mail for
U.S. postage, if the charges are separately stated on the invoice, bill of sale, or similar document
given to the purchaser.

Definitions
Delivery Charges. Delivery charges are defined in Neb. Rev. Stat. § 77-2701.11 as charges by the
seller for preparation and delivery to a location designated by the purchaser, but does not include
U.S. postage charges on direct mail that are separately stated on the invoice, bill of sale, or similar
document given to the purchaser.
Direct Mail. Direct mail is defined in Neb. Rev. Stat. § 77-2701.12 as printed material delivered or
distributed by U.S. mail or other delivery service to a mass audience or to addressees on a mailing
list provided by the purchaser or at the direction of the purchaser when the cost of the items are not
billed directly to the recipients. Direct mail includes tangible personal property supplied directly
or indirectly by the purchaser to the direct mail seller for inclusion in the package containing the
printed material. Direct mail does not include multiple items of printed material delivered to a
single address.
Sales Price. Sales price is defined in Neb. Rev. Stat. § 77-2701.35 as the total amount of
consideration for which personal property or services are sold and without any deduction for the
seller’s expenses, except charges for U.S. postage on direct mail if those charges are separately
stated on the invoice, bill of sale, or similar document given to the purchaser.

Nebraska Department of Revenue, PO Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 01-14-1

May 5, 2014

Page 2 of 2

Analysis
Neb. Rev. Stat. § 77-2703(1) imposes tax on the “gross receipts” from all sales of tangible personal
property, which includes sales of printed material classified as “direct mail.” Retailers making
sales of direct mail are required to collect sales tax on the gross receipts of the total amount of the
“sales price,” defined in Neb. Rev. Stat. § 77-2701.35, which includes amounts for delivery that
are charged by retailers. Prior to April 1, 2014, this definition of “sales price” included all delivery
charges, including U.S. postage.
With the enactment of Laws 2014, LB 867, the terms “sales price” and “delivery charges” are now
defined to exclude U.S. postage charges on direct mail that are separately stated on the invoice, bill
of sale, or similar document given to the purchaser. Therefore, beginning April 1, 2014, separately
stated U.S. postage charges for the delivery of direct mail are exempt from sales and use taxes.
This exclusion applies to all forms of direct mail, whether classified as advertising and promotional
direct mail or other direct mail. Charges by the seller of direct mail for other forms of delivery are
still subject to sales and use taxes.
Provisions of the following Nebraska Sales and Use Tax Regulations: 1-007, Gross Receipts
Defined; 1-057, Printing and Related Industries; and 1-079, Delivery Charges, are superseded to
the extent they do not provide for the U.S. postage charges exemption contained in Laws 2014,
LB 867.
APPROVED:

Kim Conroy
Tax Commissioner
May 5, 2014