Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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340.0000 MAILING LISTS AND SERVICES—Regulation 1504

Annotation 340.0127

340.0127 "Merge/Purge" Computer Service. A company, utilizing an in-house computer system, provides a service to individuals and companies ordering computer magnetic tapes of name lists. The customers order lists of names and addresses on magnetic tape from name brokers who deliver the magnetic tape to this company's facility. The company then runs the magnetic tapes into its computer to eliminate all duplicate names, bad zip codes, etc., and then prints out on computer paper all the unduplicated names. The customers are sent the computer printout with a one time use restriction. All of the contracts have a one time use restriction regardless of what form the list is in. The original magnetic tapes are sent back to the name broker after which they are erased and reused for another purpose. The company has no way of knowing whether any tax was paid and/or owed by the name broker.

When magnetic tapes are leased from a list owner by the customer for the purpose of sending the tape to this company for the merge/purge operation, use tax applies to the list owner's lease of the tape. The customer is liable for this tax which should be paid by the customer either to the list owner holding a permit or directly to the Board.

As to this company's activities which consist of only the merge/purge program and the transfer of a computer printout or set of labels to the customer, for a one time use only as a mailing list, tax does not apply to the charge made to the customer for the merge/purge program. Multiple copies of mailing labels are subject to tax. If the company supplies the customer with a new magnetic tape containing purged names and addresses, tax applies to the sale of the magnetic tape also. 9/4/80.

(Note: Subsequent statutory changes re sales of mailing list on magnetic tape.)