Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 570.0038


570.0038 Church Directories. Company A is engaged in the sales of portraits, slides, prints, and directories. It sells primarily to members of various religious organizations.

Company A agrees to take portrait photos of members of the organization who are willing to sit for a photo session. It produces a directory of the organization which contains the members' photos together with their names, addresses, telephone numbers, and other information. A copy is given, without charge, to each member who sat for a photo. A copy is also given to the organization. Additional copies are sold to members of the organization or others. The organization contends that it does not owe use tax on the copies given away because (1) the directories given away are premiums under Regulation 1671, or (2) the directories are exempt "works of art" under section 6365, or (3) the directories are not subject to tax because the cost is built into the marked up price of the directories which are sold.

The contention that the directories given away are premiums under Regulation 1671 is without merit. Regulation 1671 covers trading stamps and related promotional plans which are characterized by the use of indicia furnished based on the amount of purchases. Here, there is no such plan.

The directory is not a "work of art" as contemplated in section 6365.

As a matter of practical economics, all promotional and overhead costs are included in the selling price of goods sold. The fact that tax is paid on the sales price of goods sold does not negate the application of use tax on goods purchased to promote sales. 7/21/83.