Do a political party committee's bumper stickers, postcards, and signs mailed free to constituents qualify for New York's exemption for promotional materials mailed free to customers?

Plain-English summary

The Town of Islip Republican Committee, a local political committee, buys printed promotional material -- bumper stickers, postcards, signs, and similar items -- and mails them to constituents through common carrier, the U.S. Postal Service, or a similar delivery service. It asked whether the word "customer" in New York's promotional-materials exemption is broad enough to cover political "constituents," since these mailings otherwise look exactly like the free, mailed promotional literature the exemption is designed to reach.

The Department went to the plain meaning first: Webster's defines "customer" as "one that purchases a commodity or service," and New York's own statutory definition tracks that closely -- a customer is someone who buys tangible personal property or services, pays an admission charge, pays club dues, or occupies a hotel room. None of that describes a political constituent, who receives campaign literature without buying anything from the committee at all. Because the exemption only covers materials mailed free to a purchaser's customers or prospective customers, and constituents simply don't fit that definition under any reading, the Department concluded the exemption doesn't reach political committees' mailings to their constituents -- these purchases of promotional material remain fully subject to sales and compensating use tax.

What this means for you

Political parties, campaign committees, and candidate committees

Don't assume campaign literature -- bumper stickers, yard signs, postcards, mailers -- gets the same tax treatment as a retailer's promotional mailings to its customer list. Because your recipients (voters, constituents, supporters) aren't purchasing anything from you, New York's promotional-materials exemption doesn't apply, and you should budget for sales tax on these purchases.

Advocacy groups, nonprofits, and membership organizations doing outreach mailings

If your mailing list is built around people who support your cause or mission rather than people who buy something from you, this same "who counts as a customer" analysis likely applies -- check whether your recipients have an actual purchasing relationship with your organization before assuming the promotional-materials exemption covers your outreach materials.

Accountants and tax professionals

This is a clean, narrow illustration of how New York's promotional-materials exemption hinges entirely on the statutory "customer" definition (a purchaser of property, services, admission, dues, or hotel occupancy) -- it's a useful companion to the same-era ruling on pharmaceutical drug-sample mailers to physicians (TSB-A-99(23)S), where a similar "recipient isn't a customer" analysis defeated the exemption in a completely different industry.

Common questions

Q: Are bumper stickers, postcards, and yard signs normally "promotional materials" under New York law?
A: Yes -- items like these fit the statutory definition of promotional materials; the problem here isn't the nature of the items, it's who receives them.

Q: Why doesn't mailing these items free of charge, by common carrier, qualify for the exemption?
A: Because the exemption also requires the recipients to be the purchaser's customers or prospective customers -- people who buy or might buy something from the committee -- and political constituents don't fit that definition.

Q: Would the answer differ if the committee sold merchandise (like campaign apparel) to supporters?
A: This ruling doesn't address that scenario; it's limited to promotional materials mailed to constituents generally, with no purchase relationship described.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(12) (definition of promotional materials)
• Tax Law § 1115(n)(1), (4) (exemption for promotional materials mailed free to customers/prospective customers)
• Tax Law § 1131(2) (definition of customer)
• 20 NYCRR § 526.12 (definition of customer)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1999.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a99_15s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-99(15)S
Sales Tax
March 3, 1999

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980209B

On February 9, 1998, the Department of Taxation and Finance received a Petition for
Advisory Opinion from the Town of Islip Republican Committee, 39 Third Avenue, Bay Shore, New
York 11706.
The issue raised by Petitioner, Town of Islip Republican Committee, is whether the word
"customer" as used in subdivisions (1) and (4) of Section 1115(n) of the Tax Law, includes
"constituents" of a political party.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner is a political committee and purchases printed promotional material and delivers
it to constituents by common carrier, U.S. Postal Service or a like delivery service. The printed
material might take the form of bumper stickers, post cards, signs, etc.
Applicable Law
Section 1101(b)(12) of the Tax Law defines promotional materials as follows:
Promotional materials. Any advertising literature, other related tangible
personal property (whether or not personalized by the recipient’s name or other
information uniquely related to such person) and envelopes used exclusively to
deliver the same. Such other related tangible personal property includes, but is not
limited to, free gifts, complimentary maps or other items given to travel club
members, applications, order forms and return envelopes with respect to such
advertising literature, annual reports, promotional displays and Cheshire labels but
does not include invoices, statements and the like.
Section 1115(n)of the Tax Law provides, in part:
(1) Promotional materials mailed, shipped or otherwise distributed from a
point within the state, by or on behalf of vendors or other persons to their customers
or prospective customers located outside this state for use outside this state shall be
exempt from the tax imposed under subdivision (a) of section eleven hundred five
and the compensating use tax imposed under section eleven hundred ten of this
article.

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TSB-A-99(15)S
Sales Tax
March 3, 1999

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(4) Notwithstanding any contrary provisions of paragraph one of this
subdivision, promotional materials which are printed materials and promotional
materials upon which services described in paragraph two of subdivision (c) of
section eleven hundred five have been directly performed shall be exempt from tax
under this article where the purchaser of such promotional materials mails or ships
such promotional materials, or causes such promotional materials to be mailed or
shipped, to its customers or prospective customers, without charge to its customers
or prospective customers, by means of a common carrier, United States postal service
or like delivery service.
Section 1131 of the Tax Law provides, in part:
Definitions.--When used in this Part IV,
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(2) "Customer" shall include: every purchaser of tangible personal property
or services; every patron paying or liable for the payment of any amusement charge;
and every occupant of a room or rooms in a hotel.
Section 526.12 of the Sales and Use Tax Regulations provides:
Customer. (Tax Law, § 1131(2)) The term customer includes:
(a) Every person who purchases tangible personal property.
(b) Every person who purchases services.
(c) Every person who purchases food and drink subject to tax under section
1105(d) of the Tax Law.
(d) Every person who is a patron paying or liable for the payment of any
admission charge or charge of roof garden or cabaret.
(e) Every person who is a member of a social or athletic club, organization
or association which charges dues.
(f) Every person who is the occupant of a room or rooms in a hotel.

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TSB-A-99(15)S
Sales Tax
March 3, 1999
Opinion
The issue presented by Petitioner is whether the term "customer" as used in Section
1115(n)(1) and (4) of the Tax Law includes the constituents to whom it sends the political
advertising. Webster’s Collegiate Dictionary defines "customer" as "one that purchases a
commodity or service." The Tax Law defines customer much the same as the dictionaries. Section
1131(2) of the Tax Law and Section 526.12 of the Sales and Use Tax Regulations define customer
as one who purchases tangible personal property or services, pays an amusement charge or pays for
hotel occupancy. The term customer would not encompass the recipients of the political advertising,
who are not purchasers or potential purchasers. Accordingly, the printed materials Petitioner
delivers to the constituents are not exempt from sales and compensating use tax under Section
1115(n)(1) and (4).

DATED: March 3, 1999

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

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