Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 280.0525

280.0525 Envelopes Used to Mail Film Sold for Processing. A mail order company makes an initial sale of film for a pre-paid amount. Included with the film mailed to customers is an informational brochure and two envelopes which are used to return the exposed film for processing. The envelopes are pre-addressed to the mail order company. Attached to the envelopes are two tear-off items. One is a "return address label" upon which the customer fills in his name and address and encloses in the envelope with the exposed film for processing. The other attachment is a "print reorder form" to be filled in and returned in the envelope. One side of the envelope contains a statement limiting the mail order company's liability regarding the film. The other side is completely covered with printing as a "mail order form" to be used by the customer to order processing for prints or slides and/or new rolls of film. The customer places the exposed film, payment, and order form in the envelopes provided and mails them to the mail order company. The mail order company upon receipt, discards the envelope, processes the exposed film and fills the customers' order.

The mail order company is the consumer of the envelopes. This conclusion is based on the finding that the primary function of these envelopes is to solicit sales of other products. The pre-paid film customers did not bargain for the acquisition of the envelopes. Once the mail order company obtained the purchase price and the customer acquired the new film, that sale transaction was complete. At that time there was no agreement that the customer would return the exposed film to the mail order company for processing, including the sale of slides and/or prints. When, and if, subsequent actions occurred, these actions were pursuant to a different agreement among the parties for a separate consideration. The envelopes functioned as an advertisement, order-form and container for that subsequent transaction. The envelopes were not, therefore, a part of the original transaction involving the sale of the new film but were provided by the mail order company in anticipation of future sales. 10/31/85.