When a printer produces free advertising materials mailed in and out of New York, who owes sales/use tax and on how much?

Plain-English summary

Freed Maxick Sachs and Murphy, P.C. hires advertising agencies and printers to make promotional materials — ads, catalogs, and other literature — that it gives away free to customers inside and outside New York. It asked who charges tax, and on how much, in two situations.

The answer turns entirely on who mails the pieces.

Scenario 1 — the printer delivers to you in New York, and you mail them out.

• The printer must collect sales tax on the entire charge. The sale is complete and tax is due at the point of delivery to you in New York (per Publication 842), regardless of where the pieces later go.
• But you can recover the out-of-state share. You may apply for a credit or refund of the tax paid on the portion reshipped to points outside New York for use outside New York, under Tax Law § 1119(a)(2).

Scenario 2 — the printer mails the pieces directly to your customers.

• The printer collects sales tax only on the mailings addressed within New York (TSB-M-79(9)S). No New York tax is due on pieces the printer mails to out-of-state addresses.

Recordkeeping (both scenarios). Whoever is responsible — you in Scenario 1, the printer in Scenario 2 — must keep records showing the portion mailed outside New York and the destinations of everything mailed within New York. That means postage fees and mailing-list records, per Form ST-152 (Collection and Reporting Instructions for Printers and Mailers).

What this means for you

The delivery point drives the tax. If the printed pieces are handed to you in New York, the printer's sale is finished here and the whole invoice is taxable — even the copies you'll later send out of state. If instead the printer drop-ships directly to your recipients, only the New York-addressed pieces are taxed.

Don't overpay — claim the § 1119(a)(2) refund. When you take delivery in New York and then remail out of state, you can get back the tax on the out-of-state portion. That refund is only as good as your documentation.

Keep the mailing records. Postage records and mailing lists proving how many pieces went where (Form ST-152) are what support either the direct-mail split (Scenario 2) or your out-of-state refund (Scenario 1). Without them, you can't substantiate the exempt portion.

Common questions

Q: The printer shipped everything to my office in New York and I mailed half to customers in other states. Do I pay tax on all of it?
A: Yes at first — the printer charges tax on the entire order because delivery to you in New York completes the sale. You then apply for a refund of the tax on the portion you reship out of state for use out of state, under § 1119(a)(2).

Q: What if the printer mails the catalogs straight to my customers instead?
A: Then the printer charges New York tax only on the pieces addressed within New York. Out-of-state deliveries are not subject to New York tax (TSB-M-79(9)S).

Q: What records do I need?
A: Postage fees and mailing-list records showing how much went outside New York and the New York destinations, kept per Form ST-152. These support the direct-mail allocation or your out-of-state refund claim.

Citations and references

Statute, memoranda, and forms:

• Tax Law § 1119(a)(2) — credit or refund of tax paid on printed matter that the purchaser reships to points outside New York for use outside the state
• TSB-M-79(9)S — when a printer mails promotional materials directly to the buyer's customers, it collects tax only on mailings to New York addresses
• Publication 842 (New York State and Local Sales Tax Information for Printers) — defines "promotion materials" and treats delivery to the buyer in New York as completing the taxable sale
• Form ST-152 (New York Collection and Reporting Instructions for Printers and Mailers) — recordkeeping (postage and mailing-list records) showing in-state versus out-of-state destinations

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1988.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a88_46s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-88(46)S
Sales Tax
September 13, 1988

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE

ADVISORY OPINION

PETITION NO.S880617A

On June 17, 1988, we received a Petition for Advisory Opinion from Freed Maxick Sachs
and Murphy, P.C., 800 Liberty Building, Buffalo, New York 14207.
The issues raised are whether the adverttsing agency or printer hired by Petitioner is required
to charge sales tax and is Petitioner required to pay use tax under the following circumstances:
1.

the advertising agency or printer sends the printed material to Petitioner and
Petitioner mails it to its customers both within and outside of New York State.

2.

the advertising agency or printer mails the printed material directly to Petitioner's
customers both within and outside of New York State.

Petitioner hires advertising agencies and printers to prepare advertising, catalogs, and other
literature (promotion material) for distribution at no charge to customers, businesses, and
individuals.
"Promotion materials" consist of any tangible personal
property which is given without charge by a manufacturer,
wholesaler, or distributor to a vendor for distribution to a prospective
or current customer as an inducement or reward for a purchase and
any literature or printed matter given without charge for distribution
or use to advertise, induce, or facilitate a sale .... Examples of such
items include...
Advertising literature, catalogs. (New York State and Local
Sales Tax Information for Printers, Publication 842).
Issue 1
In the situation where the advertising agency or printer sends the "promotion materials" to
Petitioner within New York State and Petitioner subsequently mails them to individuals on a mailing
list which includes addresses both within and outside of New York State, then the advertising agency
or printer is required to collect the sales tax on the entire charge for such promotional materials. The
sale by the advertising agency or printer to Petitioner is complete and tax is due at the point of
delivery to Petitioner. However, Petitioner is eligible to apply for a credit or refund of the tax paid
on that portion of the printed matter that is not otherwise used by Petitioner within New York but
is reshipped to points outside New York for use outside New York. (Tax Law section 1119(a)(2)).

-2­
TSB-A-88(46)S
Sales Tax
September 13, 1988
Issue 2
In the event that the advertising agency or printer sends the "promotion materials" directly
to customers on Petitioner's mai]lng list which includes addresses both within and outside New York
State, the printer is requtred to collect the sales tax only on the mailings to addresses within New
York State. Technical Services Bureau Memorandum (TSB-M-79(9)S).
Moreover, Petitioner (in Issue 1) or the printer (in Issue 2) must maintain records showing
the portion of the matter mailed to persons outside New York State and destinations of all matter
mailed to persons within New York State according to the New York Collection and Reporting
Instructions for Printers and Mailers, Form ST-152. These type of records include postage fees and
mailing list records.

DATED: September 13, 1988

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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