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

432.0002 Advertising Campaigns. Taxpayer is in the business of producing and selling advertising campaigns designed specifically for the tenants of a shopping center. If the taxpayer's proposal is accepted by the shopping center's marketing director, the taxpayer produces the agreed upon campaign. Each merchant in the mall is contacted by the taxpayer to determine the size and content of the merchant's advertisement in the catalog. The taxpayer subcontracts all the production elements, including the printing. Of the catalogs printed, 98% are shipped by the printer directly to the merchants' potential customers via U.S. Mail or common carrier. The other 2% are shipped to the mall.

The printer's sale of the catalogs to the taxpayer is a sale for resale, and the taxpayer should issue a resale certificate to the printer. The taxpayer's sale to the mall is a retail sale of the catalogs and other advertising materials which may be included in the campaign. The gross receipts from this sale are the total amounts paid by the merchant/advertisers plus the amount paid by the mall.

Since the catalogs sold to the mall were printed to the special order of the customer, those which were shipped by U.S. Mail or common carrier, by the printer to a person other than the mall, at no charge to the recipient, are exempt from tax pursuant to Regulation 1541.5, "Printed Sales Messages." The mall should supply the taxpayer with an exemption certificate as specified in that Regulation. Those catalogs shipped to the mall are subject to sales tax. 10/31/90.