Tax Type
General Provisions
Description
Application of the Sales Tax to Printing Purchased by Advertising Agencies
Topic
Property Subject to Tax
Date Issued
04-23-1993
Virginia Tax Bulletin
Virginia Department of Taxation
Virginia Department of Taxation
93-7
SUBJECT: Application of the Sales Tax to
Printing Purchased by Advertising Agencies
This bulletin is intended to clarify for members of Virginia's printing industry the application of the sales tax to their instate and out-of-state advertising agency customers.
General Rule
As set out in Virginia Regulation 630-10-86, sales of printing delivered in Virginia are generally subject to the sales tax. However, an exemption exists for printed materials, other than administrative supplies, stored for 12 months or less in Virginia for distribution in other states.
Rules Not Applicable to Agencies Providing Media Advertising
Under Virginia Regulation 630-10-3, advertising agencies are deemed to be the taxable users or consumers of all tangible personal property, including printing, used in providing media advertising services. Media advertising includes direct mail.
Due to this specific provision, neither the resale exemption or the exemption above for printing distributed out-of-state apply to agencies providing media advertising services.
When Sales Tax Must be Collected from Advertising Agencies
Sales tax must be collected from advertising agencies whenever they take delivery of printing in Virginia for use in media advertising campaigns.
Delivery is deemed to be made in Virginia when any of the following actions occur:
• The advertising agency or its customer picks up printing in Virginia.
• Printing is shipped to a Virginia location of the advertising agency or its customer.
• The advertising agency or its customer hires an independent trucker or contract carrier to pick up printing in Virginia.
• The printer, acting on behalf of the advertising agency, delivers printing to a Virginia post office or mailing service for distribution to third party recipients located inside or outside Virginia.
• The printer, acting on behalf of the advertising agency, delivers printing to a mailing service or mailing house, fulfillment house or value added printer/finisher.
Delivery is deemed to occur outside Virginia, relieving the printer from Virginia tax collection, only when the printer delivers materials to an out-of-state office of an advertising agency:
• in the printer's own vehicle, or
• by means of a common carrier, the U. S. Mail, or an independent trucker or contract carrier hired by the printer.
However, to the extent that delivery occurs in another state, such state potentially may levy a use tax on the printed materials.
Copies for Ultimate Distribution in Virginia
Typically, the percentage of printing (other than administrative supplies) that is for ultimate distribution in Virginia will be taxable. However, this general rule also changes when dealing with an advertising agency in connection with a media advertising campaign.
In effect, the advertising agency will be totally taxable on all printing, regardless of its ultimate destination, if it takes delivery in Virginia by one of the means listed above. Conversely, if delivery occurs outside Virginia, the transactions are totally exempt even if a portion of the printing will be mailed back into Virginia.
Conclusion
Advertising agencies providing media advertising services create an exception to the general rules applicable to printers under Virginia Regulation 630-10-86. As this bulletin addresses this exception, it does not attempt to restate the general rules set out in the printing regulation or to address topics such as transportation charges, finance charges, bad debts, etc., that are addressed elsewhere in the regulations.
Rulings of the Tax Commissioner