How did Texas tax magazine production, subscriptions, individual sales, giveaways, and copies included in association dues?

Plain-English summary

The Comptroller treated magazine publishers as manufacturers when producing magazines and retailers when selling them. A publisher hiring another firm for production could give that firm a resale certificate.

Subscriptions lasting at least six months and mailed at second-class rates were not subject to sales tax. Magazines supplied to trade-association members as part of annual dues were treated as nontaxable annual subscriptions.

Individual magazine sales were taxable. When the publisher gave copies to selected people, it owed use tax on its cost of those magazines.

Common questions

Could the publisher buy production work for resale? Yes, with a resale certificate.

Were individual magazine copies taxable? Yes.

Were long-term mailed subscriptions taxable? No, when lasting at least six months and mailed at second-class rates.

What about free promotional copies? The publisher owed use tax on its cost.

How were copies included in annual association dues treated? As nontaxable annual subscriptions.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8908L0949G11

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

August 17, 1989

Dear ****:

I just want to take a minute to respond to your questions on the
production and sale of magazines.

Magazine publishers are treated as both manufacturers when they produce
their product and as retailers when they sell it. It just so happens that
magazine subscriptions of six months or longer are not subject to sales tax when mailed at second class rates. .

In your client's situation, they could hire another firm to do the actual
production work and give them a resale certificate in lieu of tax. When they
sell magazines on an individual basis, they would be required to charge the
tax. And, when they give them away to selected individuals, they would be
required to pay the use tax on their cost of those magazines.

When magazines are sold to members as part of their annual dues in the
trade association, the sale will be treated as a non-taxable annual
subscription.

Feel free to call or write me if you have questions. You can reach me by
calling toll
free 800-531-5441 or FAX (512) 475-0900.

Sincerely,
Al Van Allen
Taxability Section
Legal Services Division