Tax Type
Retail Sales and Use Tax
Description
Advertising Agency
Topic
Exemptions
Property Subject to Tax
Date Issued
10-07-1992
October 7, 1992
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear***************
This will reply to a letter from your firm in which you seek correction of a sales and use tax assessment for *****************(the "Taxpayer").
FACTS
The Taxpayer, an advertising agency, was audited for the period July, 1986 through August, 1990 and held liable on untaxed purchases and sales. The Taxpayer now seeks correction of the assessment on the basis that the sample periods for sales and purchases were skewed due to the inclusion of non-recurring transactions. Additionally, the Taxpayer requests a review of several items previously addressed by the department.
DETERMINATION
The Taxpayer seeks clarification of multiple transactions. I will address each separately below.
Sales Presentation Folders: Presentation folders were purchased by the Taxpayer on behalf of a client. It is the department's understanding that the folders were subsequently used by the Taxpayer's client in an administrative capacity.
Generally, Virginia Regulation (VR) 630-10-3 (copy enclosed) provides in pertinent part that all printing purchased by an advertising business is subject to the tax. If the printing is purchased from an out-of-state printer, the Taxpayer must either pay the use tax or produce documentation that the sales tax was paid in the state of purchase for credit against the Virginia tax. However, since the folders were purchased on behalf of a client for a nonmedia campaign, the Taxpayer may purchase the folders under a resale exemption certificate. It is required to collect the sales tax from its client on sales of the folders. Thus, this item will be removed from the purchases exception list.
Transportation Charges: VR 630-10-107 provides that charges from the manufacturer to the seller represent "transportation-in" to the seller and are part of the cost price of the item. Thus, the charges are included in the sales price of the item subject to the tax even if separately stated on the invoice. Since the transportation charges in the present case represent those charges from the printer of the presentation folders for shipment to the Taxpayer, such charges are to be included in the sales price of the folders and accordingly are taxable.
Business Cards: Business cards are considered administrative supplies and therefore are subject to the tax as provided in VR 630-10-3.
Standard Rate and Data Service: These books contain the ratings of television and radio stations and are used to decide the placement of advertising. Va. Code §58.1-608 (A)(6)(c) provides an exemption for any publication that is issued daily, or at regular intervals not exceeding three months, and advertising supplements and any other printed matter ultimately distributed with or as part of such publication, except newsstand sales of the same are taxable. VR 630-10-73 defines a publication as any written complication of information available to the general public. However, the exemption does not extend to reference materials and their periodic updates. Based upon the information available to the department, the Standard Rate and Data Service is an industry reference service and is therefore subject to the tax
VVNA Newsletter: The Taxpayer acts as executive director for the*********** In that capacity, the Taxpayer sends out a newsletter to the members. While a publication is granted an exemption under Va. Code §58.1-608(A)(6)(c), VR 630-10-73 restricts the definition to a publication available to the general public. Since the newsletter is sent only to******members and is not circulated to the general public, the newsletter is not deemed to be an exempt publication. The tax must be paid on printing for distribution within the Commonwealth. You should note, however that printing stored within the Commonwealth for twelve months or less and distributed outside the Commonwealth would be exempt under Va. Code 58.1-608(A)(6)(d).
Commission: Va. Code §58.1-602 defines "sales price" as the total amount for which tangible personal property or services are sold, including any services that are part of the sale. The commission charged by the Taxpayer for the service of purchasing tangible personal property should be included in the sales price for purposes of computing the sales tax since it is a service rendered in connection with the sale of tangible personal property.
Accordingly, the audit will be adjusted as noted above and a revised assessment will be mailed to the Taxpayer under separate cover.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/5251I
Rulings of the Tax Commissioner