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Sales and Use Tax TAA 13A-019 - Taxability of Advertising Mail-Outs

QUESTION: Are certain printed mail-outs subject to sales and use tax?

ANSWER: No.

August 23, 2013

Re: Technical Assistance Advisement – TAA 13A-019

Taxability of Advertising Mail-outs

Sales and Use Tax Section 212.08(7)(w), 212.08(7)(ccc), Florida Statutes (F.S.) Rule 12A-1.008(3) & (5), Florida Administrative Code (F.A.C.)

XXX (“the Taxpayer”)

FEI #: XXX

Dear XXX:

This is in response to your letter dated XXX, requesting this Department’s issuance of a Technical Assistance Advisement (“TAA”) pursuant to Section 213.22, F.S., and Rule Chapter 12-11, Florida Administrative Code (F.A.C.), regarding the taxability of certain printed materials. An examination of your letter has established that you have complied with the statutory and regulatory requirements for issuance of a TAA. Therefore, the Department is hereby granting your request for a TAA.

ISSUE

The issue is whether certain printed mail-outs are subject to sales and use tax.

FACTS

The Taxpayer is the publisher of a regularly issued multi-vendor advertising mail-out. The mailout consists exclusively of advertisements for multiple vendors who pay the Taxpayer to include them in the mail-out. The mail-outs contain coupons from multiple vendors and are sealed and attached to an envelope.

TAXPAYER POSITION

It is your position the subject mail-outs represent publications subject to either of the two exemptions found in Florida Statutes for publications distributed free of charge, on a regular basis, by the U.S. Postal Service. The two statutory provisions you allude to are s. 212.08(7)(w) and s. 212.08(7)(ccc), F.S.

You indicate the mail-outs are in compliance with s. 212.08(7)(w), F.S., as a publication, and provide in part:

The [mail-out] is a bound publication that is identified as a specific issue. For example [a mail-out] would be identified as follows:

AUTUMN ONLINE-ONLY OFFERS VALID OCTOBER 15 - NOVEMBER 11, 20121

You indicate the subject mail-outs are also subject to the exemption for Advertising materials distributed free of charge by mail in an envelope.2 You indicate in part the following:

The mailer is enclosed by a paper container that is sealed and addressed as an envelope. Since the wrap-around envelops the mailer we conclude that it meets the criteria for “mailing in an envelope”.

LAW AND DISCUSSION

Section 212.08(7)(w), F.S., provides:

Certain newspaper, magazine, and newsletter subscriptions, shoppers, and community newspapers.--Likewise exempt are newspaper, magazine, and newsletter subscriptions in which the product is delivered to the customer by mail. Also exempt are free, circulated publications that are published on a regular basis, the content of which is primarily advertising, and that are distributed through the mail, home delivery, or newsstands. The exemption for newspaper, magazine, and newsletter subscriptions which is provided in this paragraph applies only to subscriptions entered into after March 1, 1997.

Rule 12A-1.008(1)(a), F.A.C., provides:

For purposes of this rule, the term “periodicals” includes newspapers, community newspapers, shoppers, newsletters, magazines and other periodicals, but excludes books, whether published in serial form or otherwise.

Rule 12A-1.008(3)(a), F.A.C., provides:

Periodicals that meet the following requirements are exempt from tax:

1. The periodical is published on a regular basis; 2. The periodical is distributed free of charge to the recipient by mail, home delivery, rack machines, newsstands, or similar method; and 3. The content of the periodical is primarily advertising.

In the case, Department of Revenue v. Val-Pak Direct Marketing Systems, Inc., 862 So.2d 1 (Fla. App. 2 Dist. 2003), the court found that coupons mailed in envelopes were not materials subject to the shopper exemption, because they were not “in the format of a publication.”

Accordingly, it cannot be successfully argued that the subject advertising materials constitute a publication. However, the statutory change following Val-Pak allows an exemption for materials distributed free of charge by mail in an envelope. This exemption is found in s. 212.08(7)(ccc), F.S., and provides:

Advertising materials distributed free of charge by mail in an envelope.--Likewise exempt are materials consisting exclusively of advertisements, such as individual coupons or other individual cards, sheets, or pages of printed advertising, that are distributed free of charge by mail in an envelope for 10 or more persons on a monthly, bimonthly, or other regular basis.

The corresponding rule provision can be found in Rule 12A-1.008(5)(a), F.A.C., which provides:

Certain advertising materials are exempt from sales and use tax only if the materials:

1. Consist exclusively of advertisements, such as individual coupons or other individual cards, sheets, or pages of printed advertising; and 2. Are distributed free of charge by mail in an envelope; and 3. The envelope contains advertisements from 10 or more persons (advertisers).

The subject mail-outs are contained in an envelope (notwithstanding they are attached to it). Accordingly, the exemption is applicable provided the mailings are done on a regular basis as indicated.

RESPONSE

The subject printed mail-outs are not subject to sales and use tax.

This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice as specified in Section 213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes, or judicial interpretations of the statutes or rules, upon which this advice is based, may subject similar future transactions to a different treatment than expressed in this response.

You are further advised that this response, your request and related backup documents are public records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s. 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your response should be received by the Department within 15 days of the date of this letter.

Sincerely,


R. Clay Brower

Revenue Program Administrator

Technical Assistance and Dispute Resolution

(850) 717-6306

RCB/ Ctrl# 143938

End Notes:

1 The submitted samples did not contain this heading, although they do indicate the validation dates. 2 See s. 212.08(7)(ccc), F.S.

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