Tax Type
Retail Sales and Use Tax
Description
Advertising; Political consulting
Topic
Taxability of Persons and Transactions
Date Issued
08-11-1993
August 11, 1993
Re: Request for Ruling: Retail Sales and Use Tax
Dear*************
This will reply to your letter of February 8, 1993 whereby you request a ruling on the application of the retail sales and use tax on behalf of your Client. I regret the delay in providing you this response.
FACTS
The Client intends to operate as a political consultant in Virginia and to provide its services to candidates both within and without Virginia. In addition, the Client will design and implement political mail campaigns on behalf of candidates. The Client will provide concept and creative design and subsequently contract with third party vendors, also located within and without the Commonwealth, for writing, photography, printing and mailing.
You request a ruling on the correct application of the tax on the Client's invoices to candidates and on purchase invoices from vendors to the Client.
DETERMINATION
Pursuant to Va. Code §58.1-609.6(5), the tax does not apply to professional, insurance, or personal service transactions. Also, the tax does not apply to "advertising" which is defined in Va. Code § 58.1-602 to be:
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- The 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.
In the instant case the Client, who acts both as a consultant and as an advertiser who provides direct mail political advertising, is deemed to be providing personal services, the charges for which are not subject to the tax. With this in mind, I will address the issues you raise.
Sales: The sample invoice from the Client to a Virginia candidate erroneously shows a separately stated sales tax. Since the Client is providing exempt personal services, the sales tax is neither added to customer invoices nor collected from customers.
Purchases: The purchase of writing and photography used in the creation of exempt advertising are not taxable since they are themselves exempt advertising activities as defined above. This issue is more fully explained in the enclosed Public Document 88-90 (5/10/88)
Pursuant to the Code citation noted above, all purchases of printing, camera ready artwork and any other tangible personal property, including mailing labels, are taxable. As you indicate, however, separately stated delivery charges are exempt. Also, mailing house services are generally exempt, but see Public Document 89-168 (5/22/89) for further discussion of this issue.
Registration: As long as the Client exclusively provides exempt personal services, and does not make any taxable sales of tangible personal property which requires collection of the Virginia sales tax from customers, it will not be necessary for the Client to remit sales and use tax returns. However, in accordance with Virginia Regulation (VR) 630-10-109, the Client should register to file Consumer Use Tax Returns, Form ST-7, for those instances when the Virginia sales tax is not collected by vendors. To this end, a registration application and instructions are enclosed.
To provide you with additional information, I have enclosed copies of ruling letters issued by the department involving issues similar to those raised in your letter. After you have had a chance to review these letters, please let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/7046I
Rulings of the Tax Commissioner