Tax Type
Retail Sales and Use Tax
Description
Direct mailings
Topic
Taxability of Persons and Transactions
Date Issued
02-10-1997
February 10, 1997
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear**********************
This will reply to your letter in which you seek correction of the retail sales and use tax audit of your client,*************** (the "Taxpayer"), for the period of September 1993 through August 1996.
FACTS
The Taxpayer is an out-of-state § 501(c)(3) corporation. The Taxpayer conducts seminars on marketing, management, and other general business topics throughout the United States, including Virginia. The Taxpayer is also engaged in the business of mail order sales of books and audio tapes. To promote its seminars, books, and audio tapes, the Taxpayer mails printed promotional materials, primarily flyers and catalogs, to people throughout the country, including Virginia. All promotional materials are printed outside Virginia and mailed from outside Virginia free of charge to past and prospective students of the Taxpayer throughout the United States, including Virginia. The Taxpayer was audited and assessed tax on promotional materials mailed from outside Virginia to Virginia residents. The Taxpayer was also taxed on mailing lists used in their direct marketing operation. The Taxpayer is taking exception to the taxing of these items based on established rulings of the department.
DETERMINATION
Code of Virginia § 58.1-604 imposes a tax on the "use or consumption of tangible personal property in this Commonwealth, or the storage of such property outside the Commonwealth for use or consumption in this Commonwealth". The term "use" is defined in Code of Virginia § 58.1-602 as "the exercise of right or power over tangible personal property incident to the ownership thereof, except that it does not include the sale at retail of that property in the regular course of business." In the present case the Taxpayer purchases and stores all paper and mailing lists for promotional materials outside Virginia. All printing of promotional materials is done outside Virginia and mailed free of charge to recipients in Virginia. Base on these facts, and in keeping with longstanding departmental policy, I find the Taxpayer does not exercise any right or power over such materials as would bring such transactions within the provisions of the Virginia sales and use tax. This position is upheld in P.D. 85-35 (2/28/85) and P.D. 93-41 (3/4/93), copies enclosed. The audit assessment will be adjusted accordingly.
If you should have any questions, please contact ******Office of Tax Policy, at ********** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12011K
Rulings of the Tax Commissioner