How did Utah tax continuing-education registration fees, attendee manuals, direct-mail brochures, mailing lists, and small use-tax amounts?

Plain-English summary

Utah Private Letter Ruling 98-058 said continuing-education registration fees were not subject to sales tax.

The tax treatment of seminar manuals depended on billing. A separately charged manual was a taxable retail sale. A manual included without a separate charge was not taxed to the attendee, but the seminar company owed use tax on acquiring it.

Advertising brochures sent into Utah also created use-tax liability on the production materials once the company had Utah nexus.

Seminar business and nexus assumption

The company organized professional continuing-education seminars for attorneys, accountants, and similar professionals.

It arranged independent speakers and rented hotel conference rooms. Temporary-service personnel checked in attendees and distributed materials.

The request did not specify the number or size of Utah seminars or the Utah revenue.

The Commission nevertheless assumed sufficient nexus because representatives conducted seminars in Utah and the company rented or leased Utah space.

Registration fees

Seminar registration fees were not subject to Utah sales tax.

The response did not identify a separate statutory citation for that conclusion.

Seminar manuals

The company printed and bound speaker outlines outside Utah and mailed the manuals to the Utah seminar location.

The result depended on whether the attendee paid a separate manual charge:

• Separately charged manual: sales tax applied to the amount charged to the attendee.
• Manual included without an additional charge: no sales tax applied to the transfer, but the company's acquisition was subject to use tax.

For use tax, the base was the purchase price of all components making up the manual.

The Commission also said Utah's reciprocity provision allowed a credit for tax first due and properly paid to another state.

Advertising brochures

The company developed, printed, and mailed advertising brochures from its home state.

Utah use tax applied to the purchase price of the materials used to produce brochures sent into Utah.

The mailing-list purchase price was generally excluded from production cost and not subject to Utah use tax.

If the company received the list on labels that it placed on Utah mailings, however, the mailing-list price became part of the production cost and was subject to use tax.

The reciprocity provision also applied to brochure production materials.

No de minimis tax exception after nexus

The Commission acknowledged that contacts with a state can sometimes be so slight that nexus does not exist.

It found the stated facts suggested sufficient nexus.

Once nexus was established, use tax was due on the direct-mail brochures even when the amount of tax was small.

Holding

Under the ruling:

• Continuing-education registration fees were not taxable.
• Separately sold seminar manuals were taxable to attendees.
• Included manuals created use-tax liability for the seminar company.
• Manual use tax was based on the purchase price of all components.
• Brochure use tax was based on production-material cost.
• Mailing-list cost was excluded unless supplied as labels used on the mailings.
• Properly paid tax in another state could qualify for reciprocity credit.
• No small-tax exception applied after nexus existed.

What this means for you

Continuing-education and seminar companies

Separate tuition or registration from manuals and other tangible products. Invoice presentation can change who owes tax and on what base.

Direct-mail marketers

Track production inputs and how mailing-list data is delivered. Labels used on the mailpiece received different treatment from an intangible list.

Accountants and tax professionals

Confirm current nexus, digital-material, printing, direct-mail, tax-base, and reciprocity rules. This ruling assumed in-state speakers, temporary staff, and rented space.

Common questions

Q: Were seminar registration fees taxable?

A: No.

Q: Was a separately charged seminar manual taxable?

A: Yes, based on the charge to the attendee.

Q: What if the manual was included in registration?

A: The attendee was not charged sales tax on the transfer, but the company owed use tax on the manual's acquisition cost.

Q: Were direct-mail brochures taxable?

A: The company owed use tax on the materials used to produce brochures sent into Utah.

Q: Was the mailing-list cost taxable?

A: Generally no, unless the company received labels and used them on the Utah mailings.

Q: Was use tax excused when the amount was small?

A: No. Once nexus existed, the use tax was due even if small.

Key source language

• Registration: “These fees are not subject to sales tax in Utah.”
• Included manual: “this transfer is not subject to sales tax,” while the company’s “acquisition is subject to the use tax.”
• Brochures: “The use tax would be based on the purchase price of the materials used to produce the brochures that were sent into Utah.”
• Small amount: “Once nexus is established, use tax is due on the direct mailing of advertising brochures, even if the amount of that use tax is small.”

Citations and references

The official response did not cite a statute, regulation, or numbered administrative publication.

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 98-058
• Date note: the legacy page begins with “Response July 21, 1998,” but the formal response letter is dated September 30, 1998; the page uses the letter date.
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

98-058

Response July 21, 1998

Request Letter

Utah State Tax Commission

ATTN: Sales and Use Tax Technical/Legal Division

REF: Taxability of Continuing Education Registration Fees and Direct Mail Advertising Materials

Dear Sir/Madam:

Our accounting firm represents a corporation that organizes and markets continuing education seminars throughout the United State. We have several questions concerning the taxability of registration fees and direct mail advertising materials. Following is a brief overview of the Corporation's activities and a list of the questions we would like responses for.

The Corporation arranges professional education seminars for attorneys, certified public accountants and similar professionals throughout the county. In doing so, the Corporation arranges for independent speakers to present these seminars and hotel conference rooms in which to conduct the seminars.

Once a speaker, topic, and location has been arranged, the Corporation solicits an audience through a direct mailing of advertising brochures. The brochures are developed, printed, and mailed from the Corporation's home state. Seminar attendees send in a check and a registration form in response to the direct mailing. At no time are the Corporation's employees present in your state at the seminars or elsewhere to solicit seminar attendance. All solicitation is done by direct mail. Physical presence of personnel in your state is limited to the independent speakers who present the seminar and personnel from a temporary service company who are contracted to provide check in o f registrants at the seminar and to hand out the seminar materials.

Once an audience has been solicited, the Corporation arranges for the attendees to receive copies of the speaker's outline for the seminar. These outlines are prepared by the independent speakers who present each seminar and are printed and bound in the Corporation's home state. The outline/manual is then mailed directly to the seminar location to be handed out to the seminar attendees.

Given the above description of the Corporation's activities in your state, our questions concerning the application of your sales and use tax regulations are as follows:

1. Are the registration fees for the continuing education seminars subject to sale tax in your state?

2. If the registration fee is not subject to sales tax, is the value of the speaker's outline/seminar manual provided to attendees subject to a use tax?

3. If the provisions of the outlines/manuals is subject to a use tax, how should the value be established?

4. Is there s use tax on the mailing of the advertising brochures, and is so, how should the value of those brochures, in addition to the various costs of postage, paper, ink, printing, supplies, etc.

5. If there is a use tax on the direct mailing of advertising brochures, is there a De Minimis threshold to establish nexus for the use tax?

Please be as detailed as possible in your response. If you need further information on which to base your response, please contact me for clarification of the issues.

Please direct your reply to: NAME

Thank you for your time and assistance in this matter.

Sincerely,

NAME

COMPANY

RESPONSE LETTER

September 30, 1998

NAME

COMPANY

RE: Sales and Use Tax Liability for Conducting Education Seminars in Utah

Dear Mr. Young,

We have received your request for an advisory opinion concerning the Utah sales and use tax consequences for your client, a corporation that apparently organizes, markets, and conducts continuing education seminars in Utah. While you have not provided us with specific details concerning the number and size of the seminars conducted in Utah nor the amount of revenue produced in Utah, we assume there is sufficient contact with Utah to impose nexus. Among the reasons that nexus appears to exist is that the corporation does have representatives in the state conduct the seminars (specifically independent speakers and temporary contract personnel) and that the corporation rents or leases space in Utah to provide a location at which to conduct the seminars.

We shall address separately the five questions you have asked concerning the possible tax liabilities associated with the corporation�s activities in Utah.

1. Registration Fees. These fees are not subject to sales tax in Utah.

2. Seminar Manual. Should the manual be charged to the seminar attendee separately from his or her registration fee, it is subject to sales tax. Should the manual be provided without additional or separate charge, this transfer is not subject to sales tax, but instead your client�s acquisition is subject to the use tax.

3. Manual Value. If the sale of the manual is subject to sales tax, the sales tax is based upon the charge to the seminar attendee. If your client�s purchase of the manual is instead subject to the use tax, the use tax is based upon the purchase price of all components comprising the manual. As the manual is printed and bound outside of Utah, let us point out that Utah, like many states, has a reciprocity provision that allows a credit for tax that is first due and properly paid in another state.

4. Advertising Brochures. The use tax would be based on the purchase price of the materials used to produce the brochures that were sent into Utah. The purchase of the mailing list would not be considered part of the production cost and is not subject to Utah use tax unless the corporation receives the list on labels which were then placed on the mailings sent into Utah. In this latter instance, the mailing list purchase price is considered part of the production cost and is subject to Utah use tax. Please remember that the reciprocity provisions also apply here.

5. De Minimis Treatment. In certain circumstances, there may be such de minimis contact with a state that nexus does not exist. The facts, as stated earlier, suggest otherwise for your client. Once nexus is established, use tax is due on the direct mailing of advertising brochures, even if the amount of that use tax is small.

Please contact us if you have any other questions.

For the Commission,

Joe B. Pacheco, CPA

Commissioner

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