Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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432.0000 PRINTED SALES MESSAGES—Regulation 1541.5

Annotation 432.0002.150

432.0002.150 Advertising Circulars. A taxpayer is in the business of providing advertising circulars to supermarkets. The merchants call or mail in the advertising copy and the taxpayer produces the circular in its entirety. It also performs the affixing of mailing labels and delivery to the store and/or the United States Post Office. Given this information, tax applies as follows:

(1) Circulars that are delivered directly to and mailed by the United States Post Office: If the taxpayer delivers the circulars directly to the U.S. Post Office to mail the circulars to the customers of the merchants, the exemption for printed sales messages would apply. However, if the taxpayer delivers the circulars to the Post Office for mailing to the merchants, the exemption would not apply because the delivery would not be "to any other person at no cost to that person who becomes the owner thereof."

(2) If the taxpayer delivers the circulars to the customer (merchant) who, in turn, delivers the circulars to the U.S. Post Office, the exemption would not apply.

(3) Circulars that are handed out by a distributor on a door to door basis: The sale qualifies for the exemption if the taxpayer delivers the circulars to a distributor who qualifies as a common carrier for distribution to the prospective customers of the merchants.

(4) Circulars that are inserted in a newspaper: Since advertising circulars are considered as component parts of a newspaper when attached to or inserted in, and distributed with the newspaper, the exemption provided under section 6362 applies. Accordingly, the sales of circulars that are for insertion in a newspaper are exempt whether or not the circular is delivered to the merchant. 2/27/87. (Am. 2001–3).

(See Regulation 1590 for application of tax to circulars inserted in newspapers for periods after 7/15/91.)