How is a New York printer/mailer taxed on promotional mailings, and what proof lets it exclude out-of-state pieces?

Plain-English summary

George Silver, a printer and mailer, produces mailing labels from customer-owned lists on magnetic tape, addresses and stuffs envelopes, seals them, affixes postage and drops the mail at the post office. He already collects tax on the New York share of his mailings based on the customer's written figures, and asked whether a customer letter stating the percentage of out-of-state addresses is proper documentation to exempt that portion.

Issue 1 — promotional printing is taxed by destination.

• Sales tax is a "destination tax." The point of delivery (or transfer of possession) controls the tax and the rate (20 NYCRR 525.2(a)(3)), and all receipts are presumed taxable with the burden of proof on the vendor (Tax Law § 1132(c)).
• Delivered to the customer in New York → taxed here. A printer handing advertising matter to a customer in New York collects tax at the delivery locality even if the customer later ships some or all of it out of state.
• Mailed directly to designees → taxed on the whole charge unless substantiated. A printer mailing directly from New York to the customer's recipients must tax the entire printing charge at the mailing point unless it can substantiate the percentage of out-of-state destinations and the in-state addresses. Purchase orders, shipping instructions, sales contracts and similar mailing directions are acceptable proof.
• Alternate method when per-jurisdiction records are missing. A sampling method (the lesser of 10% of the list or 5,000 pieces) plus an alternative statewide rate and the current New York City rate may be used (Publication 831; Form ST-152). It applies only to promotional material (gifts, samples, advertising literature, catalogs, order forms, reply envelopes, displays, brochures, annual reports) — not to printed matter that needs clerical, typing or computer work to finish it for a specific recipient (invoices, statements, payment notices, letterheads), which is taxed where the mailing occurs. Mixed mailings can be split component-by-component with adequate records.

Issue 2 — the mailing pieces and services. Promotional material mailed to designees is used where it's mailed, so no tax when mailed out of state. But the outer envelopes and address labels used to mail from a New York post office are fully taxable (used in New York), regardless of the tax treatment of the contents (Publishers Clearing House, TSB-A-83(1)S). The services of folding, inserting, sealing, stamping/metering, mailing, and postage are not taxable if segregated on the bill (they may be combined as "non-taxable mailing"; Capital District Mailing Co., TSB-A-85(58)S). On any mixed invoice, the taxable amount must be stated separately or the whole receipt is taxed (20 NYCRR 533.2). A valid Exempt Organization Certificate (ST-119.1) or Direct Payment Permit (AU-297) relieves collection.

What this means for you

Where it lands sets the tax — but you have to prove where it landed. New York taxes printed promotional material by destination, so out-of-state pieces can escape tax. The catch is that everything is presumed taxable until you document the out-of-state addresses. A bare customer letter reciting a percentage is weak; keep the purchase orders, shipping instructions and address records that actually substantiate the split.

The alternate percentage method is only for true promo pieces. Catalogs, brochures, samples and reply envelopes can ride the sampling-and-rate shortcut. Invoices, statements and letterheads — anything finished for one specific recipient — can't; they're taxed where you mail them. Sort your job into those buckets before you compute the tax.

Separate the mailing services or lose them. Folding, inserting, sealing, postage and the like are exempt, but only if they're stated separately on the invoice. Lump them in with taxable printing and the entire receipt becomes taxable — and note the outer envelopes and labels stay taxable even when the contents are exempt.

Common questions

Q: My customer sent a letter saying 60% of the list is out of state — can I exempt that 60%?
A: Only if your records substantiate the out-of-state destinations and in-state addresses. Acceptable proof includes purchase orders, shipping instructions and sales contracts; where per-jurisdiction records are missing, you may use the alternate sampling method for promotional material.

Q: Does the alternate rate method work for my invoices and statements?
A: No. It's limited to promotional material. Printed matter that needs clerical, typing or computer work to finish for a specific recipient — invoices, statements, letterheads — is taxed where the mailing occurs.

Q: Are my folding, stuffing and postage charges taxable?
A: Not if you state them separately (you can combine them as "non-taxable mailing"). But the outer envelopes and address labels are fully taxable, and if taxable and exempt charges aren't separated on the invoice, the whole receipt is taxed.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) — taxes retail sales of tangible personal property
• Tax Law § 1132(c) — receipts presumed taxable; burden of proof on the vendor or customer
• 20 NYCRR 525.2(a)(3) — sales tax is a "destination tax"; delivery point controls incidence and rate
• 20 NYCRR 533.2 — taxable charges must be stated separately on a mixed invoice or the whole receipt is taxed

Guidance and rulings cited:

• Publication 831; Form ST-152 — alternate collection/reporting method for printers and mailers; Publication 842 — Sales Tax Information for Printers
• Publishers Clearing House, TSB-A-83(1)S — outer envelopes/labels mailed from New York are fully taxable
• Capital District Mailing Co., TSB-A-85(58)S — segregated mailing services are non-taxable

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1986.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a86_15s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-86(15)S
Sales Tax
April 24, 1986

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S851029A

On October 29, 1985 a Petition for Advisory Opinion was received from George Silver, 41
East 42nd Street - Room 619, New York, N.Y. 10017.
The issue raised is whether a letter by Petitioner's customer, which states the percentage of
out-of-state addresses contained in a mailing list, constitutes proper documentation for exempting
a portion of the total mailing charge from sales tax.
Petitioner, a printer and mailer, states its activities consist of producing mailing labels from
lists stored on magnetic tape which are owned and supplied by its customers, addressing envelopes,
inserting promotional material, sealing, affixing postage and delivering the material to the post
office. Petitioner states it collects tax on that percentage of its sales which, based on written
information from the customer, represent the number of letters mailed to destinations within New
York State.
Separately addressed herein is the tax treatment of
(1)

sales of promotional material produced by the Petitioner;

(2)

sales of mailing services performed by Petitioner, including the sale of
envelopes and labels, the services of imprinting labels and affixing them to
envelopes, and the services of collating, folding, inserting, sealing and
posting.

Issue 1.
Section 1105(a) of the Tax Law imposes a tax on "(t)he receipts from every retail sale of
tangible personal property, except as otherwise provided in this article".
Section 1132(c) of the Tax Law provides, in part: "For the purpose of the proper
administration of this article and to prevent evasion of the tax hereby imposed, it shall be presumed
that all receipts for property or services of any type mentioned in subdivisions (a), (b), (c) and (d)
of section eleven hundred five . . . are subject to tax until the contrary is established, and the burden
of proving that any receipt . . . is not taxable hereunder shall be upon the person required to collect
tax or the customer."
Sales and Use Tax Regulation 525.2(a)(3) states "(t)he sales tax is a 'destination tax', that is,
the point of delivery or the point at which possession is transferred by the vendor to the purchaser
or designee controls both the tax incident and the tax rate".

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

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

-2­
TSB-A-86(15)S
Sales Tax
April 24, 1986
Accordingly, a printer delivering printed or other duplicated advertising matter to a customer
in New York State must collect the statewide and local sales tax in effect at the locality where
possession of the property is transferred to the customer, even if the customer will subsequently send
some or all of the matter to persons outside of the State.
A printer dispatching printed or other duplicated advertising matter from within New York
State directly to recipients designated by its customer must collect, on its entire printing charge, the
sales tax in effect at the point from which the mailing service occurs, unless it can substantiate the
percentage of out-of-state destinations on the mailing list and the addresses of all in-state recipients.
Customer purchase orders, shipping instructions, sales contracts, and similar documents giving
mailing directions are acceptable as proof of the destinations.
Where records establishing the number of addressees in each New York State taxing
jurisdiction are not available, the alternative method described below may be substituted to
determine State and local sales and use taxes, provided the following conditions are met:
(1)

The mailing must include points throughout New York State.

(2)

If the mailing list includes out-of-state mailing and is compiled by geographic
location, an actual count of out-of-state mailing should be made. If the list is not
compiled by geographic location, a sampling technique, utilizing the lesser of 10%
of the list or 5000 mailing pieces, may be employed.

(3)

The actual number of pieces mailed to New York City must be determined.
Sampling under the conditions in Item 2, may be used.

Under this method an alternative rate, based on the population of New York State (excluding
New York City) and the combined tax rates imposed thereon, is applied to the New York State
(excluding New York City) mailings and the currently imposed rate is applied to New York City
mailings. Each invoice rendered for mailing services under the alternate method must state the total
pieces dispatched, the number of pieces taxable at the New York City tax rate, and the number of
pieces mailed to other New York State destinations at the currently effective alternative rate. This
rate and the statewide locality distribution percentage may be obtained from Department of Taxation
and Finance Publication 831, Supplementary Collection and Reporting Instructions for Printers and
Mailers, which is amended periodically to reflect rate changes. To receive each updated issue, a
printer or mailer may request to be placed on the mailing list maintained by the Tax Department for
that purpose. Detailed instructions for the application of the alternate rate method are provided in
Form ST-152 (5/71 and 5/77), Collection and Reporting Instructions for Printers and Mailers.
The alternative tax rate formula may be applied only to sales of promotional material, such
as free gifts and samples, advertising literature, catalogs, sales and ordering forms, business reply
envelopes, displays, brochures, and corporate annual reports. Printed matter upon which clerical,

-3­
TSB-A-86(15)S
Sales Tax
April 24, 1986
office typing or computer printing operations must be performed to complete it for the senders use
and to prepare it for the individual recipient, is subject to tax at the location where the actual mailing
service occurs. This category of mailings would comprise invoices, statement forms, payment
notices, letterheads, and like items which by their contents are not interchangeable with other
addressees on a mailing list.
When the mailing contains items, each of which is treated differently for sales tax purposes,
the appropriate sales tax treatment may be applied to each component of the mailing provided
adequate records of substantiation of the charges for each component are maintained. For example,
the alternate method of computing sales tax may be applied to advertising brochures enclosed with
monthly invoices, even though the alternate method cannot be used for the invoice portion.
Issue 2.
Promotional material mailed by Petitioner to its customer's designees is considered to be used
at the point to which it is mailed. Therefore, no tax is due when such material is mailed out of the
State. However, outside mailing envelopes and address labels used to mail printed matter from a
point in New York State through a New York post office are fully taxable as their use occurs in New
York State, notwithstanding the fact that all or a portion of the contents may be subject to the
alternate taxing method. (See Publishers Clearing House, State Tax Commission Advisory Opinion,
Jan. 14, 1983, TSB-A-83(1)S).
Accordingly, Petitioners receipts from the sale of outside envelopes and address labels
including its services of imprinting and affixing the labels to the envelopes are subject to the tax in
effect at the point of mailing.
Petitioner's charges for the services of folding written or printed matter, inserting it in
envelopes, sealing, affixing stamps or metering, mailing, and the cost of postage are not taxable if
segregated from the taxable receipt on the customer's bill. The exempt services may be combined
in a single amount under the designation "non-taxable mailing". (See Form ST-152, [5/71 and 5/77],
supra; see also Capital District Mailing Co., State Tax Commission Advisory Opinion, October 28,
1985, TSB-A-85(58)S).
With respect to the foregoing it should be noted that whenever a vendor renders to its
customer an invoice which includes both taxable and exempt charges, the taxable amount must be
stated separately thereon, or the entire receipt will be subject to tax. (20 NYCRR 533.2 [a][1];
[b][2]).
Furthermore, pursuant to section 1132 of the Tax Law, Petitioner is relieved from collecting
tax on its sales of promotional material and services in each instance where the customer has
supplied a valid Exempt Organization Certificate (Form ST-119.), or a Direct Payment Permit (Form
AU-297).

-4­
TSB-A-86(15)S
Sales Tax
April 24, 1986
Finally, it is recommended that Petitioner review Department of Taxation and Finance
Publication 842, Sales Tax Information for Printers.

DATED: April 24, 1986

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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