Were yearbooks ordered through an outside billing and payment program exempt when schools distributed them?

Plain-English summary

A yearbook publisher offered schools optional programs managed by an independent agency that accepted orders, billed families, and processed payments. Regardless of the ordering method, the yearbooks were shipped to and distributed by the school.

Florida held that yearbooks distributed by qualifying public, parochial, or nonprofit K-12 schools remained exempt. The outside agency merely provided another ordering and payment method and did not need to add tax to the quoted price.

The exemption did not extend to yearbooks distributed by other nonprofit organizations or schools outside the statutory list, or to Florida yearbook sales not associated with distribution by a qualifying school, unless another exemption applied.

What this means for you

Outsourcing order and payment processing does not necessarily change an exemption tied to who ultimately distributes the product. The school's statutory status and distribution role control.

Common questions

Did online or call-center ordering make the yearbooks taxable? No. The school still distributed the books.

Which schools qualified? Public, parochial, and nonprofit schools operated for and attended by pupils in grades K through 12.

Did every nonprofit organization qualify? No. The specific yearbook exemption was limited to the listed educational institutions.

Citations and references

• Fla. Stat. § 212.08(7)(r) (public, parochial, and nonprofit K-12 school publications)
• Fla. Admin. Code r. 12A-1.0011(3)(b) (yearbooks and similar K-12 publications)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-008

Original ruling text

SUMMARY
FACTS
The taxpayer is a company that publishes school yearbooks. The taxpayer offers several optional programs to schools
to sell the yearbooks. The taxpayer contracts with another company or independent agency to take orders for the
optional programs, as well as provide billing and payment services for sales placed through the optional programs.
Whether a yearbook order is placed directly with a school or through one of the optional programs, the yearbook will
be distributed by the school.
QUESTIONS:

1. Is the independent agency required to include sales tax on the price of the books quoted to the parents?
2. Is the answer the same if, instead of a public school, the purchaser is a not-for-profit private or parochial school or
   other not-for-profit organization?
   ANSWERS - Based on Facts Below:
3. Section 212.08(7)(r), Florida Statutes, specifically exempts from sales tax yearbooks distributed by public,
   parochial, or nonprofit grades K through 12 schools. Therefore, an independent agency is not required to include
   sales tax on the price of the books quoted to the parents when the yearbooks will be distributed by a school listed in s.
   212.08(7)(r), F.S.
4. Yes, the answer is the same for yearbooks sales for any of the listed schools in s. 212.08(7)(r), F.S., which includes
   not-for-profit and parochial schools. Yearbook sales by other nonprofit organizations or schools not listed in s.
   212.08(7)(r), F.S., do not qualify for the exemption provided for yearbooks in that paragraph and are therefore taxable
   unless some other exemption applies. In addition, any Florida sales of yearbooks not in association with distribution
   by a listed school are subject to sales tax.
   April 25, 2006
   Re: Technical Assistance Advisement 06A-008
   Sales and Use Tax - Yearbook Sales
   Sections: 212.08(7)(r), F.S.Rules: 12A-1.0011(3)(b), F.A.C.
   Petitioner: XXX (herein "Taxpayer")
   FEI: XX
   Dear:
   This letter is a response to your petition dated November 22, 2005, for the Department's issuance of a Technical
   Assistance Advisement ("TAA") concerning the above referenced party and matter. Your petition has been carefully

examined and the Department finds it to be in compliance with the requisite criteria set forth in Chapter 12-11, Florida
Administrative Code. This response to your request constitutes a TAA and is issued to you under the authority of s.
213.22, Florida Statutes.
FACTS
In a letter dated October 11, 2005, you wrote to the Department concerning yearbook sales, requesting a TAA. The
Department requested additional information, which you submitted with your November 22, 2005, letter. You also
provided more information at a later date. In addition, you provided information to access the sales call center and a
school's yearbook sales Internet sites (herein the order center).
The Taxpayer manufactures or publishes yearbooks for grades kindergarten through 12. You provided a copy of a
standard contract with schools concerning the yearbooks, which is titled "Purchase Agreement." The school
contracting for publication is responsible for the content of the yearbook. As this is a purchase agreement, the school
is also responsible for the sale of the yearbook. The Taxpayer retains the right to use some of the materials provided
by the school in its sales and promotional literature, and also as samples. The Taxpayer also retains the right to
reproduce the yearbook in whole or in part and offer it for sale. The front of the contract has a space to fill in the price.
The back of the contract lists the payment schedule; the school is alerted to contact the sales representative should
the number of copies ordered increase or decrease by more than 100 copies. The front of the contract provides a
space for the requested ship date. You stated the school is responsible for delivery to the student or other purchaser
of the yearbook.
For an additional fee, a school may also contract with the Taxpayer for three optional programs for selling the
yearbooks. The three optional programs also give purchasers alternative payment methods. The three optional
programs are 1) a school order day, 2) a home order mailing, and 3) website and call center for taking orders.
Purchasers ordering through the optional programs may be billed for purchases at a later date or they may pay by
credit cards, make installment payments, or pay by check. Yearbooks ordered through the optional programs are
delivered to the school for distribution, the same as with yearbooks not ordered through the programs. The contracts
or enrollment forms for each of the three optional programs state the following: "I understand that [Taxpayer] or other
third parties will act on behalf of the school to bill students for yearbooks and collect funds from them in accordance
with the pricing specified above."
The Taxpayer has contracted with another party or independent agency to develop and service the website and call
center for the school yearbook sales. The independent agency also provides payment processing. Payment
processing by the independent agency includes billing services for books ordered through any one of the three
optional programs. The Taxpayer's contract with the independent agency has been provided with the TAA request.
The Taxpayer's Internet site was reviewed concerning the three optional programs. The Taxpayer's Internet site (not
the order center website) states an inventory of yearbooks is not maintained and all yearbooks sold are shipped to the
school or institution for distribution. You provided copies of order forms and invoices from all three of the optional
programs. As noted, you also provided information to access the order website and call center. Currently, sales tax is
collected and remitted by the independent agency (or the Taxpayer) on orders for Florida schools through the three

optional programs.
The order forms and invoices provided by you for the optional programs list the name of the school. The return
address for payments lists the name of the school, care of the order center. Persons placing orders through the
Internet site must enter a school identification number to access yearbook sales information for a particular school.
The purchaser is directed to make checks payable to the order center.
REQUESTED ADVISEMENT
In your October 2005 letter, you ask the following questions:
Is the independent agency required to include sales tax on the price of the books quoted to the parents? Is the answer
the same if, instead of a public school, the purchaser is a not-for-profit private or parochial school or other not-for-profit
organization?
LAW AND DISCUSSION
Section 212.08(7), Florida Statutes (F.S.), provides, in pertinent part:
...
(r) School books and school lunches.--This exemption applies to school books used in regularly prescribed courses of
study, and to school lunches served in public, parochial, or nonprofit schools operated for and attended by pupils of
grades K through 12. Yearbooks, magazines, newspapers, directories, bulletins, and similar publications distributed by
such educational institutions to their students are also exempt. School books and food sold or served at community
colleges and other institutions of higher learning are taxable.
...
Rule 12A-1.0011(3)(b), Florida Administrative Code (F.A.C.), provides:
The sale of yearbooks, magazines, newspapers, directories, bulletins, and similar publications distributed by schools
offering grades K through 12 is exempt.
The exemption provided in paragraph (r) of subsection 212.08(7), F.S., is for the distribution of yearbooks by schools
grades K through 12. According to the information provided, yearbooks are distributed by the schools even when the
yearbook order is placed through one of the three optional programs that a school may sign up for to aid with school
yearbook sales. The optional programs managed by the independent agency provide another method for a purchaser
to order a school's yearbook that will still be distributed by the school. In addition, the independent agency managing
the optional programs accepts and processes payments for the school’s yearbook that will be distributed by the
school.
CONCLUSION

The schools contract with the Taxpayer to print the yearbooks. The schools may also contract with the Taxpayer for
one or more optional programs that aid in the sale of the yearbooks. The Taxpayer in turn contracts with an
independent agency to manage the optional programs. The Taxpayer's contract with a school for the optional
programs is to provide an ordering and payment processing service, as well as a billing service. Yearbooks sold
through the three optional programs are distributed by the schools. Yearbooks sold through the three optional
programs managed by the independent agency therefore qualify for the exemption from sales and use tax provided in
s. 212.08(7)(r), F.S., in the same way as an order placed directly with the school; if the school is a qualifying school,
the yearbook sale is tax exempt.
Paragraph (r) of subsection 212.08(7), F.S., specifically states the exemptions provided apply to "public, parochial, or
nonprofit schools operated for and attended by pupils of grades K through 12." Therefore, yearbooks sales through
the three optional programs for any of the listed schools qualify for the exemption from sales and use tax provided in
s. 212.08(7)(r), F.S. Yearbook sales by other nonprofit organizations or schools not listed in s. 212.08(7)(r), F.S., do
not qualify for the exemption provided for yearbooks in that paragraph and are therefore taxable unless some other
exemption applies. In addition, any Florida sales of yearbooks not in association with distribution by a listed school are
subject to sales tax.
This response constitutes a Technical Assistance Advisement under Section 213.22, Florida Statutes, which is
binding on the department only under the facts and circumstances described in the request for this advice, as
specified in Section 213.22, Florida Statutes. Our response is predicated upon 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 from that which is expressed in this response.
You are further advised that this response, your request and related backup documents are public records under
Chapter 119, Florida Statutes, and are subject to disclosure to the public under the conditions of s. 213.22, Florida
Statutes. 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,
Debra Gifford, CPA
Tax Law Specialist
Technical Assistance and Dispute Resolution
Control # 18094