Tax Type
Retail Sales and Use Tax
Description
Leases and rentals; Property tax
Topic
Taxability of Persons and Transactions
Date Issued
02-07-1997
February 5, 1997
Re: § 58.1 -1821 Application: Retail Sales and Use Tax
Dear********************
This in response to ************* letter seeking correction of the sales and use tax audit assessment issued to the *************** (the Taxpayer). I apologize for the delay in responding to his letter. Copies of all references are enclosed.
FACTS
The Taxpayer is a nonprofit service organization operated to organize, advance, and improve agricultural interests in Virginia through united efforts of local bureaus and other cooperative associations, organizations and institutions. Membership in the Taxpayer's organization is open to the public regardless of whether the person, firm or organization desiring membership is a producer or nonproducer of agricultural products.
An audit for the period December 1991 through November 1994, resulted in an assessment of use tax on untaxed purchases. The Taxpayer takes exception to the use tax assessed on printing and postage charges related to its newsletter,*************. The Taxpayer indicates that its newsletter is available to the general public, published monthly for ten months per year, and is sold by membership subscription. For these reasons, the Taxpayer maintains that its newsletter is an exempt publication under Code of Virginia § 58.1-609.6(3) and Virginia Regulation (VR) 630-10-73.
DETERMINATION
Code of Virginia § 58.1-609.6(3) provides an exemption from the sales and use tax for:
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- 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 publication; however, "newsstand sales" of the same are taxable. As used in this subdivision, the term "newsstand sales" shall not include sales of back copies of publications by the publisher or his agent.
A publication is defined as "a newspaper, magazine or other periodical which is available for general distribution to the public." Jefferson Publishing Company v. W. H. Forst. State Tax Commissioner, 217 Va. 988, 234 S.E.2d 297 (1977).
Sales of newsletter
Based on the information provided, the Taxpayer's newsletter is a publication as defined in Jefferson and satisfies the criteria in Code of Virginia § 58.1-609.6(3). The newsletter is available for general distribution to the public and meets the interval and frequency tests provided in the statute. Accordingly, membership subscriptions of the newsletter qualify for exemption from the tax. However, sales of the newsletter at retail are subject to the tax.
I would note that in P. D. 94-56 (3/14/94), the department ruled that the publication exemption does not apply when a publication is not available to the general public. In that ruling, the taxpayer's memberships were restricted to those in construction-related businesses. Accordingly, if membership in an organization is not available or open to everyone, the publication exemption will not apply.
Purchases associated with newsletter
Code of Virginia § 58.1-609.3(2)(v) provides that the retail sales and use tax does not apply to equipment, printing or supplies used directly to produce a publication described in § 58.1-609.6(3), whether the publication is ultimately sold at retail or for resale or distribution at no cost. Because the newsletter satisfies the publications exemption criteria, l find basis for abating all of the tax and associated interest assessed under bill number ***** on printing and postage charges which directly relate to the Taxpayer's newsletter.
If you have any questions about this determination, please contact ******* at ********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11489R
Rulings of the Tax Commissioner