Are a commercial printer's purchases of mailing and reply envelopes subject to sales tax, or are they purchases for resale?

Plain-English summary

The petitioner is a commercial printer that prints individualized account statements, benefit statements, insurance claim checks, and similar documents for institutional customers (credit unions, insurers). Customers transmit their clients' data; the printer prints the documents, folds and inserts them -- with a reply ("inner") envelope when the customer asks -- into outer mailing envelopes, seals, applies postage, and hands them to the U.S. Postal Service. Customers do not supply the paper or envelopes. The printer asked whether its purchases of the inner and outer envelopes are purchases for resale.

The Office of Counsel concluded the envelope purchases are for resale -- not taxable. When printing services are combined with the sale of the property by the printer, the entire transaction is a taxable retail sale of tangible personal property (20 NYCRR 527.4(a)(4); TSB-A-10(43)S). Since the printer supplies the paper and envelopes (the customer doesn't), it is selling printed materials and envelopes to its customers and must collect tax on those taxable sales. Because both the outer and inner envelopes become part of the product the printer sells, the printer's purchases of them are purchases for resale, not taxable when bought (20 NYCRR 526.6(c)(1); TSB-A-97(12)S; 96(77)S). The printer must give its vendor a properly completed resale certificate (Form ST-120) (Tax Law 1132(c); 20 NYCRR 532.4).

What this means for you

Commercial printers and mailers

Materials that become part of the finished product you sell -- paper, and both mailing and reply envelopes -- are purchases for resale: buy them tax-free with a Form ST-120, and collect tax on your sale of the finished printed product. This assumes you supply the materials (printing plus the sale of property is a taxable retail sale). If your customer furnishes the paper/envelopes and you only print, the analysis differs.

Don't pay tax twice

Don't pay sales tax on resale components and then also collect on the finished sale -- use the resale certificate up front for items that go out the door as part of the product.

Common questions

Q: Are the envelopes I buy taxable to me?
A: No. The inner reply and outer mailing envelopes become part of the product you sell, so they're purchases for resale -- buy them with Form ST-120.

Q: Do I charge my customer tax?
A: Yes. Printing combined with your sale of the paper and envelopes is a taxable retail sale of tangible personal property.

Q: What do I give my envelope vendor?
A: A properly completed resale certificate (Form ST-120).

Citations and references

• Tax Law section 1105(a) (sales tax on tangible personal property)
• Tax Law section 1132(c) (resale certificate)
• 20 NYCRR section 527.4(a)(4) (printing combined with sale of property is a retail sale)
• 20 NYCRR section 526.6(c)(1) (purchase for resale)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2012.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a12_31s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-12(31)S
Sales Tax
December 5, 2012

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S120209A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
name and address redacted. Petitioner asks whether its purchases of envelopes, both inner return
envelopes included with statements it prints for its customers’ clients and outer envelopes into
which the contents are stuffed and mailed, are purchases for resale, not subject to sales tax.
We conclude that Petitioner’s purchases of these envelopes are purchases for resale, not
subject to tax.
Facts
Petitioner is a commercial printer. It prints individualized account statements, benefit
statements, health insurance claim checks, and similar institutional documents related to the
clients of its customers who include credit unions, insurance companies and similar institutions.
Via secure Internet connection, Petitioner’s customers transmit individualized data on their
clients to the Petitioner, including client names and mailing addresses, account balances, details
of specific transactions and similar personal information unique to each client. The Petitioner
uses this information to print individualized paper statements and other documents, which it then
folds and inserts into mailing envelopes (“outer envelopes”) for direct mailing to its customers’
clients. At a customer’s request, Petitioner will insert a reply envelope (“inner envelope”) into
the outer envelope along with the statement or other documents. Petitioner then seals and affixes
postage to the outer envelopes and loads them into U.S. Postal Service carts, which are then
loaded onto U.S. Postal Service trucks at Petitioner’s loading dock at its facility in New York.
Petitioner’s customers do not furnish paper or envelopes to Petitioner.
Analysis
Based on the facts presented, Petitioner is selling tangible personal property to its
customers, consisting of printed materials and envelopes. Regulation section 527.4(a)(4) states:
“When . . . [printing or imprinting] services are combined with the sale of property by the person
performing the services, the entire transaction is subject to tax as a retail sale [of tangible
personal property].” See TSB-A-10(43)S. Petitioner prints statements and the like with
information from its customer when requested by its customer. Petitioner’s customer does not
furnish either the envelopes or the paper on which Petitioner prints the statements and other
documents. Thus, Petitioner is printing these items and selling them to its customer in a retail
sale of tangible personal property. Petitioner must collect State and local sales tax on its taxable
sales. Petitioner’s purchases of both the outer and inner envelopes, which become part of the

-2-

TSB-A-12(31)S
Sales Tax
December 5, 2012

product Petitioner sells to its customers, are purchases for resale and not subject to sales tax
when Petitioner purchases them. See 20 NYCRR §526.6(c)(1), TSB-A-97(12)S, TSB-A96(77)S. Petitioner must furnish its vendor with a properly completed resale certificate (ST-120)
when purchasing the envelopes. See Tax Law, §1132(c); 20 NYCRR §532.4.

DATED: December 5, 2012

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.