Did a free monthly publication mailed to recipients and consisting primarily of advertising qualify for Florida's shopper-periodical exemption?

Plain-English summary

Florida found the publication exempt because it was a regularly published, free advertising shopper. The publisher mailed it monthly to recipients, charged them nothing, and submitted three issues for the Department to examine. The Department concluded that its content was primarily advertising and that it met section 212.08(7)(w) and Rule 12A-1.008(3).

All three features mattered

The cited rule required the publication to be:

1. Published on a regular basis.
2. Distributed free by mail, home delivery, rack machine, newsstand, or a similar method.
3. Primarily advertising.

The ruling found all three requirements satisfied on the submitted facts.

The exemption reached publication inputs

The ruling quoted the rule permitting distributors of tax-exempt periodicals to give vendors an exemption certificate instead of paying tax on publishing or printing costs and on items such as paper and ink that become components of the publication.

What this means for you

Publishers claiming the shopper exemption should preserve evidence of publication frequency, free distribution, delivery method, and advertising content. The Department's review of actual sample issues was part of its conclusion.

Printers and suppliers should obtain the applicable exemption documentation rather than infer exemption from a publication's name alone.

Common questions

Q: Did mailing the publication prevent the exemption?
A: No. Mail was one of the permitted distribution methods.

Q: Did recipients have to pay for it?
A: No. This ruling depended on free distribution.

Q: Was regular publication alone enough?
A: No. The publication also had to be free and primarily advertising.

Q: Could the distributor buy printing inputs exempt?
A: The quoted rule allowed an exemption certificate for printing or publishing costs and component items such as paper and ink.

Citations and references

• Fla. Stat. § 212.05 — tax on retail sales
• Fla. Stat. § 212.06(16) — publisher use and cost price
• Fla. Stat. § 212.08(7)(w) — free, regularly published advertising publications
• Fla. Admin. Code r. 12A-1.008(3) — exempt-periodical requirements and vendor certificates
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 03A-055

Original ruling text

SUMMARY

QUESTION: Is the provided Publication exempt under the
provisions of Section 212.08(7), F.S.?

ANSWER - Based on Facts Below: Yes. The Publication is
distributed on a regular basis, through the mail and free
of charge. It consists primarily of advertising. Based on
the information provided and on a review of the included
sample copies, the Publication satisfies the exemption
requirements of s. 212.08(7)(w), F.S.

Nov 14, 2003

Re: Technical Assistance Advisement 03A-055
Sales and Use Tax - Shoppers
Section 212.08(7)(w), F.S.
Rule 12A-1.008(3), F.A.C.
XXX
FEI #: XX

Dear :

This is in response to your letter dated August 28, 2003, and
other correspondence provided requesting a technical assistance
advisement (TAA) regarding the above referenced party and
matter. Your letter has been carefully examined and the
Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to
your request constitutes a TAA and is issued to you under the
authority of section 213.22, F.S.

FACTS

You state in your letter referenced above that you are
publishing XXX (Publication) monthly. It is mailed to
recipients. You have enclosed three copies for our review.

ISSUE PRESENTED

Whether the Publication is exempt under the provisions of
Section 212.08(7)(w), F.S.

TAXPAYER POSITION

You state in your letter:

... [W]e believe [the Publication] meets the test as a
community paper or a shopper and the charges for printing
the periodicals (sic) should be exempt....

You cite s. 212.08(7)(w), F. S., and Rule 12A-1.008 (3), F.A.C.,
for support of your position that no tax is due on these
services, because the Publication is primarily advertising, is
distributed free, and is published on a monthly basis. You have
provided three issues of the Publication for our review.

APPLICABLE STATUTES AND RULES

Section 212.05, F.S., provides in pertinent part:

It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who engages
in the business of selling tangible personal property at
retail in this state, including the business of making mail
order sales, or who rents or furnishes any of the things or
services taxable under this chapter, or who stores for use
or consumption in this state any item or article of
tangible personal property as defined herein and who leases
or rents such property within the state.

(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:

(a)1.a. At the rate of 6 percent of the sales price of each
item or article of tangible personal property when sold at
retail in this state, computed on each taxable sale for the
purpose of remitting the amount of tax due the state, and

including each and every retail sale.

Section 212.06(16), F.S., provides:

(16)(a) Notwithstanding other provisions of this chapter,
the use by the publisher of a newspaper, magazine, or
periodical of copies for his or her own consumption or to
be given away is taxable at the usual retail price thereof,
if any, or at the "cost price."

(b) For the purposes of this subsection, the term "cost
price" means the actual cost of printing of newspapers,
magazines, and other publications, without any deductions
therefrom on account of the cost of materials used, labor
or services cost, transportation charges, or other direct
or indirect overhead costs that are a part of printing
costs of the property. However, the cost of labor to
manufacture, produce, compound, process, or fabricate
expendable items of tangible personal property which are
directly used by such person in printing other tangible
personal property for sale or for his or her own use is
exempt. Authors' royalties, fees, or salaries, general
overhead, and other costs not directly related to printing
shall be deemed to be labor associated with manufacturing,
producing, compounding, processing, or fabricating
expendable items.

Section 212.08(7)(w), F.S., provides:

(w) Certain newspaper, magazine, and newsletter
subscriptions, shoppers, and community newspapers.-Likewise exempt are newspaper, magazine, and newsletter
subscriptions in which the product is delivered to the
customer by mail. Also exempt are free, circulated
publications that are published on a regular basis, the
content of which is primarily advertising, and that are
distributed through the mail, home delivery, or newsstands.
The exemption for newspaper, magazine, and newsletter
subscriptions which is provided in this paragraph applies
only to subscriptions entered into after March 31, 1997.

12A-1.008 (3), F.A.C., provides:

(3)(a) Periodicals that meet the following requirements are
exempt from tax:

1. The periodical is published on a regular basis;

2. The periodical is distributed free of charge to the
   recipient by mail, home delivery, rack machines,
   newsstands, or similar method; and

3. The content of the periodical is primarily advertising.

(b) The sale of subscriptions to periodicals that are
delivered to the subscriber by mail are exempt.

(c) Distributors of tax exempt periodicals may issue an
exemption certificate to their vendors in lieu of paying
tax on the publishing or printing costs of, or for the
purchase of items, such as paper and ink, that are
incorporated into and become a component part of, the
publication.

RESPONSE

Section 212.05, F. S., provides that tax is imposed on the sales
price of each item or article of tangible personal property sold
at retail in this state. Section 212.06(16)(a), F.S., further
provides that the use by a publisher of copies of a newspaper,
magazine, or periodical for its own consumption or to be given
away is taxable. Use tax is due on the "cost price" of the
publication.

Section 212.08(7)(w), F.S., and Rule 12A-1.008(3), F.A.C.,
provide exemptions for certain publications from the tax imposed
by Chapter 212, F.S. The Publication is distributed on a
regular basis, free of charge, through the mail. It consists
primarily of advertising.

Based on the information provided in your letter and on review
of the included sample copies, the Publication satisfies the

exemption requirements of s. 212.08(7)(w), F.S. The Publication
also satisfies the exemption requirements of Rule 12A-1.008(3),
F.A.C.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes, or judicial interpretations of the
statutes or rules, upon which this advice is based, may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Valerie Koenitzer, C.P.A.
Senior Tax Specialist
Technical Assistance and Dispute Resolution
(850) 922-9412

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