Could a Virginia country club buy printing for its bimonthly newsletter without sales or use tax?

Subject

Country-club newsletter printing qualified for exemption

Plain-English summary

Virginia removed tax on printing a golf course and country club's bimonthly newsletter because the newsletter qualified as an exempt publication.

The club sent the newsletter to members and also placed copies in its clubhouse and sales office. Those facilities were open to nonmembers who came to play golf or attend events, making the written information available to the general public.

The newsletter also met the timing test: Virginia's statute covered publications issued daily or regularly at average intervals no longer than three months. Because the newsletter was produced every two months and available beyond the membership, the vendor's printing used to produce it could be purchased tax-free. The related audit amount was removed.

What this means for you

• A membership organization's newsletter can qualify as a publication if it is genuinely available to the general public.
• Regular frequency matters; this bimonthly schedule satisfied the statute's three-month interval limit.
• The exemption covered printing used directly to produce the qualifying publication.
• Member distribution alone was not the only fact—the club also made copies available where nonmembers could obtain them.
• The ruling does not create a blanket exemption for every internal newsletter or marketing piece.

Common questions

Why was the newsletter considered available to the general public?

Copies were placed in the clubhouse and sales office, both open to nonmembers visiting the facilities.

How often was it published?

Every two months.

Did the printing purchase qualify for exemption?

Yes. The Commissioner held that printing used to produce this qualifying publication could be bought tax-free.

What happened to the audit item?

The portion of the assessment tied to newsletter printing was removed.

Citations and references

• Va. Code § 58.1-609.3(2)(v).
• Va. Code § 58.1-609.6(3).
• 23 VAC 10-210-1060.
• P.D. 95-222 (Aug. 29, 1995); P.D. 97-378 and P.D. 97-379 (Sept. 19, 1997).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 07-182

Original ruling text

November 21, 2007

Re: § 58.1-1821 Application: Retail Sales and Use Tax

Dear *:

This is in response to your letter in which you seek correction of the retail sales and use tax assessment issued to * (the "Taxpayer") for the period December 2002 through November 2005. I apologize for the delay in responding to your letter.

FACTS

The Taxpayer owns and operates a golf course and country club located in Virginia. The Taxpayer publishes a bimonthly newsletter about various events, club members, past events and other subjects of interest to the community. The information and stories are submitted to an outside vendor who compiles the information and prints the finished newsletter for distribution. The newsletters are sent directly to club members and a portion of the newsletters is placed in the clubhouse and sales office for the general public. The clubhouse and sales office are open to non-members who visit to play golf or attend events held by at the club's facilities.

The Taxpayer was assessed use tax on the purchase of the newsletters from the vendor that publishes and prints the newsletter. The Taxpayer maintains that the transaction is exempt pursuant to Va. Code § 58.1-609.6 3 and prior rulings of the Tax Commissioner.

DETERMINATION

Virginia Code § 58.1-609.3 2 v provides that the retail sales and use tax does not apply to equipment, printing or supplies used directly to produce a publication described in Va. Code § 58.1-609.6 3, whether the publication is ultimately sold at retail or for resale or distribution at no cost.

Virginia Code § 58.1-609.6 3 provides that the retail sales and use tax shall not apply to the following:

Any publication issued daily, or regularly at average intervals not exceeding three months, and advertising supplements and any other printed matter ultimately distributed with or as part of such publications; however, newsstand sales of the same are taxable. As used in this subdivision, the term "newsstand sales" shall not include sales of back copies of publications by the publisher or his agent.

Title 23 of the Virginia Administrative Code 10-210-1060 defines a publication as "any written compilation of information available to the general public. Publication does not include general reference materials and their periodic updates."

Based on the information provided by the Taxpayer, the newsletter meets the interval test required by Va. Code § 58.1-609.6 3. The newsletter is also available to the general public through the Taxpayer's clubhouse and sales office which are open to non-members. Accordingly, the newsletter qualifies as an exempt publication under Va. Code § 58.1-609.6 3 and therefore, the printing used to produce the newsletter may be purchased exempt of the tax. This is consistent with the treatment of similar taxpayers in Public Documents 95-222 (8/29/1995), 97-378 (9/19/1997) and 97-379 (9/19/1997). Accordingly, the portion of the tax assessment associated with the cost of printing the newsletter will be removed from the assessment.

The Code of Virginia and regulation sections cited, along with the public documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. If you have any questions about this determination, you may contact * in the Office of Policy and Administration, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner