Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
195.0000 CONTAINERS AND LABELS—Regulation 1589
(a) IN GENERAL—NONRETURNABLE CONTAINERS
195.0925 Promotional Displays. A manufacturer and wholesaler of health and beauty products promotes various products by sending its customers these products, in trial or sample sizes, in special packages referred to as "packers." Packers come in various sizes. During promotional periods, the packers are used to fill all orders and reorders for the promoted items until the supply of the packers is depleted. The packers contain 12 to 18 promoted products which are placed in paper, cardboard, or plastic trays inside the packer and are designed to sit on a counter or shelf. The packers, which hold the trial size products, are constructed so that they can be removed from the corrugated shipping boxes and sit on a counter in a display position.
The trial or sample size products are sold to the customers, not given away. In some of the larger packers, the unit includes a header board, made of colorful sturdy cardboard showing a picture of the product, a message advertising the product, and a sheet of assembly instructions. The floor display contains a cardboard base, which can be folded and assembled to form a base for the tray of products. The manufacturer believes the packers are shipping cartons, designed and engineered to protect and house the product during shipment.
The packers are designed with the display of the product in mind. The retailer can easily open a packer and set it on a counter. While the packer does have a certain amount of utility as a shipping container, that was not the purpose for which it was designed. The packer, including the trays, stand, headers and instructional materials are considered to be marketing aids, and the manufacturer is the consumer of these items. The corrugated liner in which the packers are shipped are nonreturnable shipping containers. 5/23/90.