How much Texas use tax applied to out-of-state catalogs and a mailing list used for Texas and non-Texas recipients?

Plain-English summary

A Texas company prepared catalog content and sent it to an Oregon printer. A Maryland firm prepared the mailing list, and the printer mailed the finished catalogs to prospective clients.

The company had to accrue state and local use tax on the portion of the catalog sales price attributable to copies mailed to Texas addresses, including copies sent to its Texas office. The letter allowed that portion to be calculated as the percentage of total catalogs delivered into Texas.

The mailing list was a taxable information service. The company also had to accrue state and local use tax on the percentage of the list representing people located in Texas.

Common questions

Were catalogs mailed outside Texas included in the taxable catalog share? No. The calculation used the percentage delivered into Texas.

Did catalogs sent to the company's own office count? Yes.

Was the entire mailing-list charge taxable? No. The letter taxed the percentage representing Texas names.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8906L0948C02

Original ruling text

June 19, 1989

Dear **:

I am responding to your letter requesting a determination of your
company's tax responsibilities on sales catalogs and mailing lists that are
produced out of Texas.

You explained that your company provides the photographs, writes
descriptions, and prepares a rough layout which is sent to the printer in
Oregon. You also explained that a mailing list is prepared for your company by
a firm located in Maryland. The mailing list is sent to the printer in Oregon.
The printer will send a catalog draft to your company for approval before
mailing the final product to prospective clients per the mailing list.

Your company must accrue use tax on the sales price of the number of
catalogs mailed to Texas addresses as well as on the price of the catalogs sent
to your office. The taxable sales price can be determined by creating a
percentage using the total number of catalogs sold to you and the total number
of catalogs delivered into Texas. For example, 20,000 total catalogs sold,
divided into 600 catalogs delivered into Texas results in three percent (3%) of
the total sales price. Your company must accrue all applicable state and local
use taxes on this "Texas" portion of the total sales price.

The provision of a mailing list is the performance of a taxable
information service. The percentage which represents names of persons located
in Texas is taxable. Your company must accrue all applicable state and local
use taxes on this amount also.

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

You may also write to Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division
Tax Correspondence