Tax Type
Retail Sales and Use Tax
Description
Free newspapers
Topic
Taxability of Persons and Transactions
Date Issued
12-20-1989
December 20, 1989
Re: Request for Ruling/Sales and Use Tax
Dear***************
This will reply to your letter dated April 21, 1989 seeking a ruling on the correct application of the sales and use tax to the purchase of a printing press and related equipment for both in-house and outside commercial printing activities by your client, ************(the "Taxpayer").
FACTS
The Taxpayer is involved in placing weekly newspapers on various military bases for which there is no charge. Its compensation for this is the revenue from advertising placed in the publications. It is presently subject to the sales and use tax on the printing costs and other material used in producing these periodicals.
The Taxpayer is in the process of acquiring, installing, and testing a printing press and related equipment with which to produce these publications in-house. Additionally, it is undertaking setting up a separate commercial printing department to handle its needs as well as outside commercial printing contracts. It anticipates that the volume of its excess capacity available for outside customers will reach over fifty percent. It requests a ruling on the applicability of sales and use tax to its outside commercial printing activities.
Additionally, the Taxpayer has received a printing press which is not subject to acceptance for final payment until after a satisfactory trial run period. The Taxpayer also requests a ruling as to whether the tax should be imposed on the acceptance date or the delivery date.
Finally, the Taxpayer requests a waiver of any penalties and/or interest in the case of any previous acquisitions which have been made but not reported because of misinterpretations of its liability for use tax.
RULING
Virginia Code §58.1-608(3)(b)(v) provides that the retail sales and use tax does not apply to:
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- equipment, printing or supplies used directly to produce a publication described in subdivision 6 c whether it is ultimately sold at retail or for resale or distribution at no cost. (emphasis added)
- equipment, printing or supplies used directly to produce a publication described in subdivision 6 c whether it is ultimately sold at retail or for resale or distribution at no cost. (emphasis added)
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- [a]ny 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, except that newsstand sales of the same are taxable.
- [a]ny 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, except that newsstand sales of the same are taxable.
Section 630-10-73 of the Virginia Retail Sales and Use Tax Regulations defines "publication," for the purposes of the above exemption, as "any written compilation of information available to the general public...[but] does not include general reference materials and their periodic updates."
In the instant case, the Taxpayer places weekly newspapers on various military bases. Since the military comprises a large portion of the population of the areas within which these military bases are located, it can be surmised that such newspapers are available to the general public.
Based on the foregoing, I find that the printing press and related equipment which the Taxpayer is acquiring will be exempt from the tax regardless of whether it is used to produce the Taxpayer's newspaper or for outside printing activities.
Additionally, any supplies used directly by the Taxpayer in producing its own newspapers will be exempt from the tax under Virginia Code §58.1-608(3)(b)(v). Items used by the Taxpayer in its commercial printing activities which become part of printed materials for sale or resale are also exempt from the tax pursuant to VR 630-10-86 3(A).
The Taxpayer's question regarding the date on which the sales tax should be imposed on a printing press that has been received but is not subject to acceptance for final payment until a satisfactory trial run period has expired and its request for waiver of penalties that may be assessed because of failure to report use tax are moot in light of the foregoing.
If you have any further questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner