Were a catalog stand and company-logo planner guides exempt Virginia advertising materials?

Subject

Taxpayer denied an exemption sales and use tax for the purchase of a catalog stand

Plain-English summary

Virginia refused to reverse its tax determination for both the catalog stand and the planner guides. After correcting an initially submitted photograph, the taxpayer showed that the stand was a black easel used to discourage removal of bound catalogs from stores.

The Department distinguished an earlier ruling that exempted display racks needed to support printed graphics and brochures. Here, the bound catalogs could be displayed without the stand, so the stand was not necessary support for the printed materials and remained taxable.

The company-logo planner guides also remained taxable. The prior determination treated them as administrative tools rather than materials used for external promotion, and the taxpayer supplied no new facts showing a different use.

What this means for you

• A display fixture does not qualify merely because printed materials sit on it; the ruling required the fixture to provide necessary support for their display.
• A logo alone does not establish external promotional use.
• On reconsideration, new photographs or facts must address the legal reason the Department denied the exemption.

Common questions

Q: Why was the catalog stand different from the exempt displays in P.D. 98-97?
A: The earlier displays supported printed materials that could not be displayed without them. These bound catalogs could stand as displayable materials without the easel.

Q: Why were the planner guides taxable despite the company logo?
A: The ruling treated them as administrative tools, and the taxpayer provided no additional facts showing external promotional use.

Q: Did the reconsideration change any part of the assessment?
A: No. The Commissioner found no basis to revise the prior determination.

Citations and references

• 23 VAC 10-210-3010 H.
• P.D. 98-97 (May 20, 1998).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 08-100

Original ruling text

June 18, 2008

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

Dear *:

This is in response to your letter submitted on behalf of * (the "Taxpayer") in which you request reconsideration of the Department's prior determination issued to the Taxpayer. I apologize for the delay in responding to your letter.

FACTS

In a determination letter dated August 17, 2007, the Department denied the Taxpayer an exemption from the retail sales and use tax for the purchase of a catalog stand. The Taxpayer has provided a picture of a catalog stand and requests that the determination with respect to the catalog stand be overturned. In an e-mail to the audit staff, the Taxpayer also requests reconsideration with respect to the determination made regarding the Taxpayer's planner guides.

DETERMINATION

Catalog Stand

The picture of the catalog stand provided with the Taxpayer's reconsideration request is different from the one at issue in the audit. The catalog stand at issue in the audit is described as "a black easel." Based on this discrepancy, the audit staff contacted the Taxpayer for clarification. It was determined that the incorrect picture had been included with the Taxpayer's reconsideration. The Taxpayer provided a picture of the correct catalog stand for review with its reconsideration. Additionally, based on further conversation with the audit staff, the Taxpayer indicated that the catalogs used with the catalog stand are bound booklets. The Taxpayer further indicated that the catalog stand is used to prevent removal of the catalogs from the stores in which they are used.

In Public Document (P.D.) 98-97 (5/20/98), the taxpayer was assessed tax on the purchase of point-of-purchase displays. Each display consisted of a frame that supported and displayed printed graphics describing the taxpayer's products, pockets to hold printed brochures, product information tear sheets, and a window unit. The Tax Commissioner determined that the display racks were exempt because the printed materials could not be displayed without some means of support.

Based on the information provided, the Taxpayer's catalogs do not require the support of the catalog stand to be displayed. Unlike the point-of-purchase displays in P.D. 98-97, the catalogs can be displayed without means of support. The catalogs are bound and do not have to be secured to the catalog stand for support while being displayed. In order for the exemption to apply, the display ( i.e. , the catalog stand) must provide support for the printed materials. That is not the case in this instance. Accordingly, the ruling in my prior determination stands.

Planner Guides

The Taxpayer contends that pursuant to P.D. 98-97, the planner guides are exempt of the tax. The Taxpayer contends that the planner guides have its company logo printed on them and should be treated like the note pads in P.D. 98-97 for retail sales and use tax purposes.

In the prior determination, pursuant to Title 23 of the Virginia Administrative Code 10-210- 3010 H, the planner guides were deemed to be an administrative tool, not used "for external promotional purposes." The Taxpayer has not provided any additional information to support that the planner guides are used for other than an administrative tool. Accordingly, the ruling in my prior determination stands.

CONCLUSION

After carefully reviewing the information provided and the audit report, I find there is no basis to revise my prior determination. Accordingly, the assessment is correct as issued with regard to the catalog stand and planner guides. This letter is my final determination on this matter. If you have any questions about this response, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-1835583137.P