Tax Type
Retail Sales and Use Tax
Description
Advertising; Printed materials purchased on behalf of government
Topic
Taxability of Persons and Transactions
Date Issued
04-29-1993
April 29, 1993
Re: Request for Ruling: Retail Sales and Use Tax
Dear*************
This will reply to your letter of October 7, 1992 in which you request a ruling concerning the purchase of printing and other tangible personal property used in conjunction with advertising projects of **************(the "Taxpayer").
FACTS
The Taxpayer is an advertising agency which purchases brochures on behalf of its client, a local government. The brochures promote tourism and economic development for the local government in Virginia. In that this local government is exempt from sales and use tax on its purchases, the Taxpayer seeks information on whether it is liable for tax on printed materials purchased on behalf of this local government in conjunction with an advertising or nonadvertising project.
RULING
Advertising Projects
Va. Code §58.1-608(A)(6)(e), copy enclosed, provides an exemption from the sales and use tax for "advertising", which is defined in Va. Code §58.1-602, copy enclosed, 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.)
As provided in the statute above, an advertising agency which purchases printed materials for use in an advertising project on behalf of the client is a user and consumer of such materials. In addition, §2.B. of Virginia Regulation (VR) 630-10-3, copy enclosed, provides that:
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- [t]he tax applies to all purchases by an advertising business including, without limitation,...printing, including direct mail items, non-customized or stock mailing lists, handbills, brochures, flyers, bumper stickers, posters, and similar printed materials.... (Emphasis added.)
- [t]he tax applies to all purchases by an advertising business including, without limitation,...printing, including direct mail items, non-customized or stock mailing lists, handbills, brochures, flyers, bumper stickers, posters, and similar printed materials.... (Emphasis added.)
Nonadvertising Projects
When an advertising business provides services in the production and sale of tangible personal property which is not considered advertising, such as business cards or employee newsletters, the Taxpayer should add the tax to the total charge of such items, unless a valid exemption certificate is furnished by the client. In addition, pursuant to a resale certificate of exemption (Form ST-10), the Taxpayer may purchase any tangible personal property, such as printing, exempt of the tax when it becomes a component part of the items sold.
The department is currently in the process of revising the Virginia Retail Sales and Use Regulation 630-10-3: Advertising. We will include you on our mailing list to receive information concerning any proposed changes to the regulation during the regulation revision process.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6467N
Rulings of the Tax Commissioner