NY TSB-H-81(34.1)S Sales Tax 1983-08-23

When computing a shopping paper's advertising percentage, is the area of an inserted advertising supplement counted — after the Department's 1983 modification?

Short answer: Not counted — this modification excludes the supplement's area. This is a MODIFIED Advisory Opinion that changes the Department's earlier opinion to the New York State Publishers Association, TSB-H-81(34)S (issued February 9, 1981). It provides that where an advertising supplement is included as part of a shopping paper, the area of the supplement is NOT to be included in computing the percentage of the printed area of the publication devoted to advertising versus the area devoted to other matter. That is the opposite of the original opinion, which had counted the supplement's area toward the 90%-advertising test for shopping-paper status under Tax Law § 1115(i). The modification (issued August 1983) references the Department's memorandum TSB-M-83(20)S. Excluding the supplement area makes it easier for a publication carrying heavy insert advertising to stay under the 90% ceiling and qualify as an exempt shopping paper.

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This page answers the general question as of 1983. Ezel answers yours, under current New York tax law, with citations.

Disclaimer: This is an official New York State Department of Taxation and Finance MODIFIED Advisory Opinion, issued by the Technical Services Bureau (identified with the earlier 'TSB-H' numbering prefix used alongside 'TSB-A' in 1981) at a taxpayer's request. It modifies the Department's earlier Advisory Opinion to the same petitioner, TSB-H-81(34)S (February 9, 1981), and references the Department's memorandum TSB-M-83(20)S. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued (August 1983) and may since have changed. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

This is a modified Advisory Opinion. It changes the Department's earlier opinion to the New York State Publishers Association, TSB-H-81(34)S (issued February 9, 1981), on how to compute a shopping paper's advertising percentage.

The new rule: an inserted advertising supplement's area is NOT counted.

The original opinion (TSB-H-81(34)S) had held that where an advertising supplement is included as part of a shopping paper, the supplement's area must be included when computing the percentage of the publication's printed area devoted to advertising versus other matter.
This modification (issued August 1983; referencing TSB-M-83(20)S) provides the opposite: where an advertising supplement is included as part of a shopping paper, the area of the supplement is not to be included in that computation.

Why it matters: a publication qualifies for the shopping paper sales-tax exemption under Tax Law § 1115(i) only if its advertising does not exceed 90% of the printed area of each issue. Excluding the supplement area from that calculation makes it easier for a paper carrying heavy insert advertising to stay under the 90% ceiling and keep its exempt status.

What this means for you

This is the Department's current position on the supplement question — not the 1981 original. If you publish a shopping paper, do not include the area of inserted advertising supplements when testing whether your advertising stays under the 90% printed-area limit. The earlier opinion that counted them has been modified.

The change is taxpayer-favorable. Leaving supplement area out of the numerator (and the total) makes the 90% advertising ceiling easier to satisfy, so publications that rely on advertiser-supplied inserts are more likely to qualify as exempt shopping papers.

The rest of the § 1115(i) test still applies. The publication must still carry advertisements from numerous unrelated advertisers and otherwise meet the shopping-paper requirements; only the treatment of supplement area changed.

Common questions

Q: Do I include advertising-supplement inserts when computing my shopping paper's ad percentage?
A: No. Under this modified opinion, the area of an advertising supplement included as part of a shopping paper is not counted in the advertising-percentage computation — reversing the Department's original 1981 opinion.

Q: How does this differ from the earlier opinion, TSB-H-81(34)S?
A: The original opinion counted the supplement's area toward the advertising percentage. This 1983 modification excludes it. Follow this modified opinion.

Q: Does excluding supplements help me qualify for the exemption?
A: Generally yes. Because advertising must not exceed 90% of the printed area under § 1115(i), removing the supplement's advertising area from the calculation makes it easier to stay under that limit.

Citations and references

Statutes, regulations and authority:

Tax Law § 1115(i) — exempts receipts from the retail sale of shopping papers (and related printing services); requires advertising not to exceed 90% of each issue's printed area
TSB-H-81(34)S — the original February 1981 opinion (modified here) that had included the supplement's area in the computation
TSB-M-83(20)S — the Department memorandum reflecting the modified treatment of advertising supplements

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/h81_34_1s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-H-81(34.1)S
Sales Tax
August 23,1983

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

PETITION NO. S801112C

This modifies an Advisory Opinion issued to the New York State Publishers
Association on February 9, 1981 (TSB-H-81(34)S) so as to provide that where an
advertising supplement is included as part of a shopping paper the area of the
supplement is not to be included in computing the percentage of the printed area
of the publication devoted to advertising versus the area devoted to other
matter. See TSB-M-83(20)S.

DATED: July 28, 1983

TP-8 (3/83)

s/FRANK J. PUCCIA
Director
Technical Services Bureau

RODERICK G. W. CHU, COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

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