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 432.0300

432.0300 Unmailed Printed Sales Messages. The taxpayer, a print broker, contracts with a printer for printing material that qualifies as "printed sales messages" and sells that printed material to its client. The printed sales messages are delivered by the printer to a mailing house. The mail house merges the printed sales messages and the client's company's billing into an envelope and delivers them to the U.S. Post Office for mailing. Since the exact number of billing statements to be mailed are not known when the printing order is placed, the taxpayer orders an extra number of printed sales messages to be certain that a sufficient number are available. For example, 165,000 are ordered and 160,000 are mailed leaving 5,000 left over. The 5,000 are destroyed since they are date sensitive and not to be used again.

In this situation, the taxpayer, a print broker, contracts with a printer for the printed material and then sells that printed material to its customer. The taxpayer purchases the printed material for resale. In which case, sales tax will not apply to the sale of the printed material to the taxpayer. The taxpayer's sale of the printed material to its customer is a retail sale subject to sales tax unless the sale is exempt. Since the printed matter is a printed sales message, the exemption for the sale of printed sales messages applies.

In addition, the taxpayer would not incur tax liability for material which was purchased for resale but has become unsalable and is discarded. (Annotation 280.0660 (11/28/66).)

Accordingly, under these specific facts, the sale of the printed materials is exempt from tax including that printed material which was not used (destroyed). 3/8/96.