94-248 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Publishing and broadcasting; Microforms and CD-Rom compilations

Topic

Taxability of Persons and Transactions

Date Issued

08-12-1994

August 12, 1994

Re: Request for Ruling: Retail Sales & Use Tax

Dear**********

This will respond to your letter of September 23, 1993 in which you seek a ruling on the application of the retail sales and use tax to sales by your company,******** (the "Taxpayer"), of periodicals and newspapers in various formats.

FACTS

The Taxpayer is a micropublisher of journals and newspapers. It sells microforms (microfilm and microfiche) and CD-Rom of other publishers' publications. The microforms or CD-Rom may be provided on a subscription or one-time basis.

The Taxpayer also sells copies of articles from certain publications. The copies may be shipped via the U.S. Postal Service in tangible form or via electronic means.

You seek a ruling as to application of the retail sales and use tax to sales of your products.

RULING

Va. Code §58.1-609.6(3) provides an exemption from the retail sales and use tax for:

- any publication issued daily, or regularly at average intervals not exceeding three months, and advertising supplements and any other printed matter ultimately distributed with or as part of such publications, except that newsstand sales of the same are taxable.

Virginia Regulation (VR) 630-10-73 defines "publication" as "any written compilation of information available to the general public" and provides that the term does not include general reference materials and their periodic updates. Thus, any publication, other than a general reference material and its periodic updates, which is published at least four times a year, available to anyone (availability not restricted to a particular group), and containing a written compilation of information qualifies for the above exemption. The exemption is applicable regardless of the medium of the publication - whether it is in the traditional print format or in microform or CD-Rom. However, back copies of exempt publications are taxable.

A majority of the periodicals and newspapers listed in your letter qualify as exempt publications under the above statute and regulation. Accordingly, provided (i) the printed version of a publication meets the above exemption criteria, (ii) the Taxpayer makes such available in microform or CD-Rom on a subscription basis with a frequency of delivery of at least four times a year, and (iii) subscribers receive the microforms or CD-Rom at the normal subscription interval, its sales of the microforms, etc., are nontaxable. Microforms or CD-Rom provided to a customer after the normal subscription interval would be deemed to be back copies and thus taxable. In addition, due to the frequency requirement and back copy issue, yearly one time shipments are taxable.

In addition, sales of article copies in tangible form are taxable. However, sales of articles which are sent via electronic means (fax, internet, or other electronic means) are not taxable since no tangible personal property is conveyed in providing this information. [See P.D. 91-224 (9/23/91) which explains the distinction between information provided in tangible form and that which is provided electronically.]

Provided the Taxpayer meets the dealer requirements set forth in Va. Code §58.1-612, copy enclosed, it is required to collect sales tax on taxable sales of its products to Virginia customers, unless such sales are otherwise exempt. Exempt sales would include, but not be limited to, sales to nonprofit colleges or other institutions of learning [Va. Code §58.1-609.4(2)] or sales to public libraries operated by the state or its political subdivisions [Va. Code § 58.1-609.1(4)]. If the Taxpayer is not required to collect the sales tax, its Virginia customers should remit use tax to the department on their purchases.

If you have any further questions about this matter, please let me know.

Sincerely,

Danny M. Payne
Tax Commissioner

OTP/7406H

Rulings of the Tax Commissioner