Ezel / Tax Rulings / TX
TX 8811L0916B01 Sales and/or Use Tax (State,Local,MTA) 1988-11-21

Were charges for advertising space on freely distributed laminated message boards taxable as sales of tangible property?

Short answer: No. Texas treated the business as selling advertising space, while requiring it to pay tax on printing, laminating, or materials used to produce the boards.

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This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas 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) is the authoritative source for any reliance.

Plain-English summary

The business sold advertising space on laminated message boards and decided where and how many boards to distribute. Advertisers might receive a few complimentary copies only as proof that the board was produced and distributed.

Texas treated the transaction as advertising service rather than a sale of tangible personal property. The provider paid tax to printers and laminators or, for in-house work, paid tax on the materials used to make the boards.

Common questions

Were advertisers buying the physical boards? No under the stated facts.

Did complimentary copies change the answer? No. They served as proof of production and distribution.

Who paid tax on production? The advertising provider paid tax on outside printing or laminating and on in-house materials.

Source

Original ruling text

November 21, 1988

Dear ***:

I am writing in response to your letters and our telephone
conversations regarding the taxability of the laminated message
boards you produce and distribute as advertisement.

You contact businesses in various areas and sell space on a
laminated message board. These boards are distributed, at your
discretion, to other businesses, homes, etc. within a specified
area. The business pays a set amount for space on the message
board and receives one, or possibly two or three, copies of the
message board. This complimentary copy is provided as proof that
the board was actually produced and distributed. The business
does not direct the mailing of the boards; you decide the area of
distribution and the number distributed.

You are selling advertising space, not tangible personal property.
*** should pay tax to the printer, laminator, etc., on the
cost of printing or laminating the boards. However, you explained that
most of the work is done in-house. In this case you must pay tax
on the materials used to produce these boards.

This opinion is based on the facts presented. If there are addi-
tional or different facts, the opinion may change.

You may write Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division
Tax Correspondence

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