Tax Type
Retail Sales and Use Tax
Description
Is Instructional Video Taxable
Topic
Property Subject to Tax
Date Issued
08-27-2001
August 27, 2001
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This will reply to your letter in which you seek a ruling regarding the application of the retail sales and use tax to the purchase of an informational video. I apologize for the delay in responding to your request.
FACTS
The Taxpayer, a furniture manufacturer, hired an advertising agency to produce a video for distribution to a national furniture retailer that distributes the Taxpayer's furniture products. The theme of the video is instructional in nature and centers around the advantages and selling points of a specific furniture line of the Taxpayer's. The video is to be shown to the retailer's sales people as a sales tool. In other words, the video is for distribution to the Taxpayer's retailers to be used as in-house training for their sales people. The Taxpayer is requesting a ruling as to whether the videotape qualifies as media advertising under Title 23 of the Virginia Administrative Code (VAC) 10-210-41.
RULING
Code of Virginia § 58.1-609.6(5) provides an exemption from the sales and use tax for "advertising," which is defined in Code of Virginia § 58.1-602 as:
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- [t]he planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting and other media, including, without limitation, the providing of concept, writing, graphic design, mechanical art, photography and production supervision. Any person providing advertising as defined herein shall be deemed to be the user or consumer of all tangible personal property purchased for use in such advertising. (Emphasis added).
Title 23 VAC 10-210-41 provides that "the tax does not apply to charges by an advertising business for professional services in the planning, creating or placing of advertising in newspapers, magazines, billboards, direct mail, radio, television, or other media ...." (Emphasis added). As provided in both the statute and regulation, in order for the sale of advertising to be exempt, such advertising must be "media" advertising. "Media" is defined in VAC 10-210-40, copy enclosed, as "newspapers, magazines, billboards, direct mail, radio, television, and other modes of communication." It has been the longstanding policy of the department that in order for advertising to qualify as "media" advertising, such advertising must be directed toward and available to the general public as a whole.
Keeping the above in mind, I find that the purchase of an in-house training video used to train an in-house sales staff does not qualify as media advertising. It has been the longstanding policy of the department that such training tools are the taxable sale of tangible personal property. See, for example, Public Documents (P.D.) 87-105 (3/30/87) and 94-216 (7/7/94), copies enclosed. Accordingly, I find the purchase of the video by the Taxpayer is subject to the tax.
If you should have any questions, please contact ***** in the department's Policy Development Office at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/27366K
Rulings of the Tax Commissioner