Tax Type
Retail Sales and Use Tax
Description
Advertising homes for sale; Publication exemption criteria
Topic
Exemptions
Property Subject to Tax
Date Issued
05-02-1991
May 2, 1991
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear*****************
This will reply to your letter of August 31, 1990 seeking correction of a sales and use assessment to your company, ***********for the period of September 1, 1987 to September 30, 1988.
FACTS
The Taxpayer publishes a magazine which contains advertisements for homes for sale. The magazine is published at least four times per year and is distributed free of charge to the public. The Taxpayer does the rough lay-out and design work for the magazine and sends it to its franchiser in another state for printing. The completed magazine is then shipped to Virginia for distribution at no cost to the public.
You contest the assessment on the grounds that the magazine it publishes qualifies as an exempt publication under Va. Code §58.1-608(6)(c) and thus no tax should have been assessed.
DETERMINATION
A recent Ruling of the Tax Commissioner, P.D. 91-29 (3/11/91), copy enclosed, addresses the applicability of the sales and use tax to "shoppers" magazines advertising homes for sale. It explains that such magazines do not qualify for the publication exemption provided in Va. Code §608(6)(c), nor do they qualify for the "catalog" exemption in Va. Code §58.1-608(6)(d). Accordingly, the Taxpayer is subject to the use tax under Va. Code §58.1-604 on its purchases of printing from the franchiser.
The ruling letter points out, however, that royalty charges paid by a taxpayer, if only for the intangible right to use the franchiser's name, are not subject to the tax if separately stated. However, if such charges are based on the number of pages printed, they would be subject to the tax since tangible personal property is received in connection with such royalties. It further explains that transportation or delivery charges are nontaxable if separately stated on the invoice. Handling charges, however are subject to the tax. If the franchiser bills the Taxpayer a lump-sum amount for the above, the total charge is subject to the tax.
Accordingly, I find no basis for revision of the assessment unless the Taxpayer can provide documentation indicating that transportation and royalty charges were separately stated on the sales invoices for the magazines included in the audit and that the royalty charges were merely for the intangible right to use the franchiser's name. Upon receipt of such information, if within 45 days, I will revise the assessment accordingly.
Such documentation should be sent to the department's office Services Division, Technical Services Section, P.O. Box 6-L, Richmond, Virginia 23282. If the documentation is not received within the specified time period, the assessment, with interest accrued through the date of your letter shall be due and payable immediately.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner