My client publishes 10-20 page industry reports (mostly narrative articles, less than 10% statistics) by subscription, sent by mail, e-mail, Internet, or fax at varying frequencies. Do these qualify as nontaxable magazines, and does the delivery method or frequency change the answer?

Plain-English summary

A publisher created industry reports for the lumber industry in two flavors: (1) 10-20 page reports aimed at executives, containing articles from various authors with less than 10% statistical content, published at varying intervals (weekly, monthly, bi-monthly, semi-annually) and sold by subscription for six months or longer, distributed by second-class mail, e-mail, Internet, or fax; and (2) daily/weekly market reports containing the publisher's own statistical assessments and market analysis, which the taxpayer already understood to be taxable information services.

The question was whether the first category — the article-heavy executive reports — qualified as a nontaxable magazine under Tax Code Section 151.320(a). The Comptroller said no: these reports are a taxable information service, not a magazine, because they don't meet the statutory definition in Section 151.320(b) — "a publication that is usually paperbacked and sometimes illustrated, that appears at a regular interval, and that contains stories, articles, and essays by various writers and advertisements." The letter doesn't specify exactly which element the reports failed (the ruling doesn't mention whether they carried advertisements), but concludes the reports as described don't fit the magazine definition.

Two follow-up questions got clean "no" answers: the transmission method doesn't matter (mail, e-mail, Internet, and fax are treated the same for taxability purposes), and frequency doesn't matter either (weekly through semi-annual reports are analyzed the same way).

What this means for you

Industry newsletter and report publishers

Don't assume that having articles from multiple authors, in a magazine-like format, automatically qualifies your publication for the magazine sales tax exemption. The statutory definition requires specific elements — including advertisements — and the Comptroller will classify a publication lacking those elements as a taxable information service instead.

Businesses delivering content across multiple channels (print, e-mail, web, fax)

The delivery mechanism doesn't change the underlying taxability of the content — if the substance is a taxable information service, it stays taxable whether it arrives by mail or e-mail.

Accountants and tax professionals advising publishers and content businesses

This letter is a useful contrast point: know the full Section 151.320(b) magazine definition (paperbacked, regular interval, stories/articles/essays by various writers, AND advertisements) before assuming a periodic subscription publication qualifies — missing any element can tip a publication into taxable information-service treatment.

Common questions

Q: Do industry reports with articles from multiple authors automatically qualify as exempt magazines?
A: No — they must meet the full statutory definition in Section 151.320(b), including containing advertisements; reports lacking that element are treated as taxable information services.

Q: Does it matter whether reports are delivered by mail, e-mail, Internet, or fax?
A: No — the transmission method doesn't affect taxability.

Q: Does publication frequency (weekly vs. semi-annual) change the answer?
A: No — the Comptroller confirmed frequency doesn't affect taxability either.

Q: Can I rely on this letter for my own publication's tax treatment?
A: No. This opinion is based on the facts presented, and if there are additional or different facts, the opinion may change; it can be relied on only by the taxpayer it was issued to.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.320(a) (magazine sales tax exemption)
• Tex. Tax Code § 151.320(b) (statutory definition of "magazine")

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9902188L

Original ruling text

February 17, 1999

Dear **:

Thank you for your recent letter concerning your client's Texas sales and use
tax responsibilities.

Your client is in the business of creating various types of reports for the
lumber industry. These reports fall under two categories:

1. It produces ten to twenty page reports with articles from various authors
   designed for executives in the industry that contain a de minimus amount of
   statistical information (less than 10%). There are various reports covering
   different segments of the industry and are produced weekly, monthly, bi-monthly
   and semi-annually. These reports are disseminated through second-class mail,
   e-mail, Internet or fax and are sold by subscription for semi-annual or longer
   periods of time.

2. It also produces daily and weekly market reports which contain the
   publisher's assessment of various statistical information and market analysis.
   You understand that the daily and weekly market reports are taxable information
   services.

Question 1. Are the ten to twenty page reports considered nontaxable magazines
pursuant to Texas TAC Code Section 151.320(a)?

Answer: No, these reports are an information service. Texas Tax Code Section
151.320(b) defines a magazine as "a publication that is usually paperbacked
and sometimes illustrated, that appears at a regular interval, and that
contains stories, articles, and essays by various writers and advertisements."

Question 2. Does the different transmission of the reports affect the
taxability?

Answer: No.

Question 3. Does the frequency of the reports affect the taxability?

Answer: No.

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

You may call toll-free 1-800-531-5441, extension 3-4683, if you have any
questions or need more information. My direct line is 512/463-4683. You may
write to Tax Policy Division, Comptroller of Public Accounts, P.O. Box 13528,
Austin, Texas 78711-3285.

Sincerely,

Eddie C. Washington
Tax Policy Division