Is the cost of printing a free advertising-only paper taxable, and are ad fees or subscriber postage charges taxed?

Plain-English summary

Brooklyn Metropolitan Real Estate News plans to publish a free monthly paper carrying only real-estate advertising — display ads and listings by brokers and the public — with about 50,000 copies distributed free from bulk drop locations (banks, stores, diners). The public may subscribe (the mailing list is under 1% of circulation). Revenue comes from advertiser fees. The publisher asked whether its cost of producing the publication is subject to sales tax.

The Department's answers:

• It's not a newspaper or periodical, so no § 1115(a)(5) exemption. Newspapers and periodicals are exempt, but a publication must "conform generally" to detailed definitions (20 NYCRR 528.6): a newspaper carries matters of general interest and reports of current events; a periodical carries a variety of articles by different authors on literature, sciences, arts, news, or a field of endeavor. Because this publication contains only advertising, it is neither — nor is it a "shopping paper," which must be published at least 50 times a year (528.6(d)(2)(ii)).
• Free giveaways make the printing a taxable purchase. Property purchased and given away free for promotion or advertising is not purchased for resale; it is a retail sale to the purchaser (the publisher), and a resale certificate may not be used (20 NYCRR 526.6(c)(4)). So the publisher's purchases of printing services and supplies (including inserts) to produce the paper are taxable.
• Advertising revenue is exempt. Amounts billed to advertisers for listings and display ads are advertising charges, exempt under § 1105(c)(1) (which taxes information services but excludes advertising) (see Declaratory Ruling 80-01, TSB-H-80(22)S).
• Subscriber "handling" is taxable. Subscribers pay a small per-issue amount described as covering first-class postage and handling. A "receipt" excludes separately stated transportation cost (§ 1101(b)(3); 20 NYCRR 526.5(g)), but handling costs are part of the taxable receipt — and if postage is combined with handling in a single amount, the entire charge is taxable (TSB-M-84(13)S). So the publisher must collect tax on amounts billed as "handling" or "postage and handling."
• Registration. The publisher must register as a vendor with the Tax Commission (§ 1134(a)(1)).

What this means for you

"It reads like a paper" isn't enough — content controls. New York's newspaper/periodical exemption requires real editorial content: news, general interest, or varied articles. A publication that is all ads doesn't qualify, and neither does it reach the "shopping paper" category unless it publishes at least 50 times a year.

Free distribution means you're the end user. When you give the printed product away for advertising, you didn't buy it for resale — you bought it at retail. So the printing and supplies are taxable to you, and you can't use a resale certificate.

Your ad income is clean, but watch subscriber charges. Advertising charges are exempt. But if you bill subscribers for "postage and handling," the handling portion is taxable — and lumping postage in with handling taxes the whole line. Separate and reasonably state true postage to keep it out of the tax base.

Register before you start. Producing and selling into this stream makes you a vendor; file your certificate of registration before commencing business.

Common questions

Q: My publication looks like a local paper. Is it an exempt newspaper?
A: Not if it contains only advertising. To be an exempt newspaper or periodical it must carry news or a variety of general-interest articles; an all-ad paper doesn't qualify, and it isn't a "shopping paper" unless published at least 50 times a year.

Q: I give the papers away free. Can I buy the printing for resale?
A: No. Property given away free for advertising is a retail sale to you, so a resale certificate can't be used and your printing and supply purchases are taxable.

Q: Are the fees I charge advertisers taxable?
A: No. Charges for listings and display ads are advertising charges, which are exempt under § 1105(c)(1).

Q: I bill subscribers for "postage and handling." Is that taxable?
A: The handling portion is taxable, and combining postage with handling in one amount makes the entire charge taxable. Only separately stated, reasonable transportation is excluded from the receipt.

Citations and references

Statute:

• Tax Law § 1115(a)(5) — exempts newspapers and periodicals
• Tax Law § 1105(c)(1) — taxes information services but excludes advertising
• Tax Law § 1101(b)(3) — "receipt" excludes separately stated transportation but not handling
• Tax Law § 1134(a)(1) — vendor registration requirement

Regulations and guidance:

• 20 NYCRR 528.6 — definitions of "newspaper," "periodical" and "shopping paper" (must "conform generally"; shopping paper ≥ 50 issues/year)
• 20 NYCRR 526.6(c)(4) — property given away free for advertising is a taxable retail sale to the purchaser; no resale certificate
• 20 NYCRR 526.5(g) — separately stated, reasonable transportation is excluded from the receipt
• Declaratory Ruling 80-01, TSB-H-80(22)S — advertising charges are exempt
• TSB-M-84(13)S — handling is taxable; postage combined with handling makes the whole charge taxable
• TSB-M-79(3)S — meaning of "conform generally" for newspapers and periodicals

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1985.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a85_57s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-85(57)S
Sales Tax
November 14, 1985

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S850808A

On August 8, 1985, a Petition for Advisory Opinion was received from Brooklyn
Metropolitan Real Estate News, 75-15 Jamaica Avenue, Woodhaven, New York 11421.
The issue raised is whether Petitioner's cost of producing a publication, which will contain
only advertising by real estate brokers and the general public, is subject to sales tax.
Commencing in October 1985, Petitioner intends to publish once a month the "Brooklyn
Metropolitan Real Estate News". Circulation will approximate fifty thousand copies, and distribution
will be free of charge mainly from bulk drop locations at banks, stores and diners. The public may
subscribe to the paper. At present, the mailing list represents less than one percent of the total
circulation.
Petitioner's business will derive its revenue from the fees charged to advertisers for display
ads and listings. Referral coupons included in the publication are distributed without charge to all
Realtors who purchase advertisements.
Section 1105(a) of the Tax Law imposes a tax on the receipts from retail sales of tangible
personal property. Section 1105(c)(1) of the Tax Law imposes a tax on receipts from the sale of the
service of the ". . .furnishing of information by printed, mimeographed or multigraphed matter. . .
but. . . excluding the services of advertising. . . ." Section 1115(a)(5) of the Tax Law provides for
an exemption from sales and use tax with respect to "newspapers and periodicals".
The Sales and Use Tax Regulations define the terms "newspaper" and "periodical", in
relevant part, as follows:
"In order to constitute a newspaper, a publication must conform generally to the following
requirements: (i) it must be published in printed or written form at stated short intervals, usually
daily or weekly; (ii) it must not, either singly or, when successive issues are put together, constitute
a book; (iii) it must be available for circulation to the public; and (iv) it must contain matters of
general interest and reports of current events." 20 NYCRR 528.6(b).
"In order to constitute a periodical, a publication must conform generally to the following
requirements: (i) it must be published in printed or written form at stated intervals, at least as
frequently as four times a year; (ii) it must not, either singly or, when successive issues are put
together, constitute a book; (iii) it must be available for circulation to the public; (iv) it must have
continuity as to title and general nature of content from issue to issue; (v)

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

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TSB-A-85(57)S
Sales Tax
November 14, 1985

each issue must contain a variety of articles by different authors devoted to literature, the sciences
or the arts, news, some special industry, profession, sport or other field of endeavor." 20 NYCRR
528.6(c).
The term to "conform generally" means that the publication must meet all of the criteria
generally. See Department of Taxation and Finance, Definition of Newspapers & Periodicals,
January 23, 1979, TSB-M-79(3)S. Since Petitioner states that its publication will not include matters
other than advertising material, it will not constitute either a "newspaper" or a "periodical"; nor will
it qualify for exemption as a "shopping paper", which must be published at least 50 times a year. 20
NYCRR 528.6(d)(2)(ii).
Sales and Use Tax Regulations Section 526.6(c)(4) provides, in part, that:
(i) "Tangible personal property which is purchased and given away without charge, for
promotion or advertising purposes is not purchased for resale. It is a retail sale to the purchaser
thereof, and is not a sale to the recipient of the property... (iii) A resale certificate may not be used
by the person making the purchases described in subparagraphs (i)... of this section for such
purchases.
Consequently, Petitioners purchases of printing services and supplies necessary for the
production of the publication, including inserts, are subject to tax.
Amounts billed to advertisers for listings and display ads constitute an advertising charge.
These receipts are exempt from tax under the provisions of Section 1105(c)(1) of the Tax Law,
quoted supra. See also State Tax Commission, Declaratory Ruling 80-01, February 8, 1980, TSB-H­
80(22)S.
Petitioner explains that its subscribers will be charged a small amount per issue, not for the
publication itself, but to cover first class postage and handling.
Section 1101(b)(3) of the Tax Law defines the term "receipt" as:
"The amount of the sale price of any property and the charge for any service taxable under
this article, valued in money...without any deductions for expenses...and excluding the cost of
transportation of tangible personal property sold at retail where such cost is separately stated in the
written contract if any, and on the bill rendered to the purchaser." (Emphasis added)
Regulation 526.5(g)(3) provides that transportation charges shall be deemed to be separately
stated if they can be computed from information appearing on the bill.
Regulation 526.5(g)(4) provides that to qualify for the exclusion, transportation charges must
be reasonable in relation to prevailing established rates.

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TSB-A-85(57)S
Sales Tax
November 14, 1985

However, handling costs billed to a customer are part of the taxable receipt. If postage,
shipping or similar charges that would otherwise be exempt are combined with handling charges in
a single amount, the entire charge becomes subject to sales tax. See Department of Taxation and
Finance, Taxable Status of Charges for Transportation and Handling of Tangible Personal Property,
September 10, 1984, TSB-M-84(13)S.
Thus, Petitioner must collect the applicable State and local sales taxes on any amounts billed
to its subscribers which are designated either as "handling" charges, or as "postage and handling"
charges.
Section 1134(a)(1) of the Tax Law provides, in relevant part, that "Every person required to
collect any tax imposed by this article commencing business or opening a new place of business. .
.shall file with the tax commission a certificate of registration, in a form prescribed by it, at least
twenty days prior to commencing business or opening a new place of business, or such purchasing
or taking of possession or payment, whichever comes first."
In such a case, Petitioner would be required to register as a vendor with the New York State
Tax Commission.

DATED: October 28, 1985

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth herein.