Tax Type
Retail Sales and Use Tax
Description
Advertising; Printed Materials
Topic
Taxability of Persons and Transactions
Date Issued
12-28-1992
December 28, 1992
Re: Request for Ruling: Retail Sales and Use Tax
Dear****************
This will reply to your letter in which you request a ruling on the application of the sales and use tax on printed materials and direct mail purchased by **************(the Taxpayer) on behalf of its clients.
FACTS
The Taxpayer is a Virginia corporation engaged in advertising and marketing services. The Taxpayer requests a ruling on the applicability of the retail sales and use tax on three areas of purchases.
RULING
Va. Code §58.1-608(A)(6)(e) provides an exemption from the sales and use tax for "advertising" which is defined in Va. Code §58.1-602 as the "planning, creating, or placing of advertising in newspapers, magazines...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) Virginia Regulation (VR) 630-10-3 provides in pertinent part that, "the tax applies to all purchases by an advertising business including, without limitation, the following items:...[p]rinting, including direct mail items, non-customized or stock mailing lists, handbills, brochures, flyers, bumper stickers, posters, and similar printed materials...and whether or not any of such materials are intended for distribution out of the state." (Emphasis added)
Brochures and Inserts
The Taxpayer designs and develops brochures and inserts for the marketing of new homes on behalf of a client. The Taxpayer completes the brochure or insert and then delivers it to a printer to be printed. After the material is printed, the materials are delivered to the client at the direction of the Taxpayer. Because the printed materials are ordered by the Taxpayer on behalf of a client, all purchases of these printed materials are deemed to be purchases by the Taxpayer under the provisions stated above and are therefore taxable.
Direct Mail Cards
A customer in Washington, D.C. orders a direct mail piece from the Taxpayer to advertise a future sale to their customers. The piece is designed and developed by the Taxpayer and delivered to a printer for printing. The printer then delivers the piece to a mail house in Maryland for mailing. Under the provisions stated above, the Taxpayer is deemed to be the purchaser of the printing and must pay the tax on the printing purchase.
Fees or charges for the development and creation of brochures, inserts or direct mail cards will be exempt under the provisions stated above.
Annual Reports
A customer contracts with the Taxpayer for corporate annual reports for use in marketing itself. The Taxpayer develops and designs the annual report and contracts with a printer to print the materials. The department has held in previous rulings that the creation and design of annual reports are deemed to be exempt. (P.D. 87-103 (August 26, 1987), copy enclosed) However, the purchase of printing of the annual reports by the Taxpayer will be held taxable.
If you have any questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/5016I
Rulings of the Tax Commissioner