Were free advertising messages printed on cash-register tape exempt from Florida use tax?

Plain-English summary

Florida ruled that free cash-register tape printed with local advertisements was subject to use tax when imported and distributed in the state.

The advertising company printed the tape in California and shipped it by common carrier to selected Florida grocery stores at no charge. Stores used it for receipts, handing the printed tape to shoppers at checkout.

Florida's exemption required materials consisting exclusively of advertisements, distributed free by mail in an envelope, containing advertisements from at least ten persons, on a monthly, bimonthly, or other regular basis. The register tape failed multiple conditions: it was handed out rather than mailed in envelopes, receipts meant it was not advertising-only, and the required advertiser count and regular schedule were not established.

The company was a dealer causing tangible property to be imported for Florida distribution and had to accrue and remit use tax, including the tax it and its predecessor had already paid beginning with the stated September 2007 collection period.

What this means for you

Free promotional material can still create use tax. Narrow advertising exemptions require exact compliance with content, packaging, delivery, advertiser-count, and frequency conditions.

Common questions

Did free distribution make the tape exempt? No.

Why did receipt printing matter? It meant the tape did not consist exclusively of advertisements.

Did California's printed-sales-message rule control? No. Florida applied its own narrower exemption.

Citations and references

• Fla. Stat. §§ 212.05, 212.06, and 212.08(7)(ddd), and Fla. Admin. Code r. 12A-1.008, as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10A-002

Original ruling text

SUMMARY
QUESTION:
Are the Taxpayer’s printed materials are exempt from use tax pursuant to the exemption
in section 212.08(7)(ddd), F.S.
ANSWER – Based on the Facts Below:
Review of the cash register tapes and the information regarding distribution of the cash
register tapes provided by the Taxpayer indicates that they do not meet all the
requirements of the exemption. The cash register tapes are delivered free of charge to the
retailers and the end consumers. However, the cash register tapes are not distributed to
the end user in an envelope or by mail. The advertisements are handed to the customer as
they make purchases and receive a receipt of the purchase. The printing of the
customer’s receipt of the purchase also means that the materials distributed to the end
user do not consist exclusively of advertisements. Further, there is no indication that the
cash register tapes are distributed “on a monthly, bimonthly, or other regular basis,” or
that each distribution contains advertisements from ten or more advertisers.
January 14, 2010
XXX
Re:

Subject: Technical Assistance Advisement (TAA) 10A-002
Use Tax – Printed Materials
Sections, 212.05, 212.06, and 212.08, Florida Statutes (F.S.)
Rule 12A-1.008, Florida Administrative Code (F.A.C.)
XXX (Taxpayer)
FEI # XXX
XXX (Predecessor)
FEI # XXX

Dear XXX:
This is in response to your letter dated October 21, 2009, requesting this Department’s
issuance of a Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S.,
and Rule Chapter 12-11, F.A.C., concerning use tax paid for printed materials distributed
free of charge in Florida. An examination of your letter has established you have
complied with the statutory and regulatory requirements for issuance of a TAA.
Therefore, the Department is hereby granting your request of a TAA.
Facts
The Taxpayer previously requested an advisement regarding this issue in a letter dated
September 29, 2009. In that letter, the Taxpayer provided the following facts:

Today, I contacted the Florida Department of Revenue with reference to [Rule
12A-1.008(5)(a), F.A.C.,] Advertising Materials Distributed Free of Charge.
Although [the rule] specifies[,] “distributed free of charge by mail in an
envelope[,]” we believe[,] similar to the State of California[,] our distribution of
free advertising materials delivered into Florida should be exempt.
I will attempt to give you all the facts as follows relative to our doing business in
Florida:
1) We sell advertising to local businesses through independent contractors (who
can sell advertising for other companies). These advertisements are printed on
the back of register tape that is then delivered via common carrier from our
California printing facility directly to the local grocery [store] that the
advertiser has selected. There is no charge for the register tape to the
receiving local grocery store in Florida.

The Taxpayer’s letter dated October 21, 2009, provides the following in part:
I am writing on behalf of the [Taxpayer] and its predecessor [Predecessor],
relative to use taxes paid to the State of Florida starting with the collection period
September 2007. . . .

The remaining significant issue relates to the following facts:
We are delivering printed advertising messages that are printed to the special
order of the purchaser;
Mailed or delivered by the seller . . . through the United States Postal Service or
common carrier;
Received by the other person (defined as “any person, other than the purchaser or
the purchaser’s agent, who takes physical delivery of the printed sales messages
and who exercises dominion and control over the property”) at no cost to that
person who becomes the owner of the printed material. ( emphasis provided in
original)
Similar to Florida [Rule 12A-1.008(5), F.A.C.,] our advertising materials are
distributed free of charge, distributed to zip code specific, consist exclusively of
advertisements, can contain up to 10 or more individual coupons or
advertisements, and are of no other tangible value to the ultimate recipient of the
cash register tape (namely the customer).
Issue

Whether the Taxpayer’s printed materials are exempt from use tax pursuant to the
exemption in section 212.08(7)(ddd), F.S.
Taxpayer Position
The Taxpayer’s letter provides that it believes that the distribution of the cash register
tapes in Florida is exempt from use tax, because the cash register tapes meet the
requirements of section 212.08(7)(ddd), F.S. The Taxpayer cites Rule 12A-1.008(5),
F.A.C., for support of its position. The Taxpayer also cites the State of California
Regulation 1541.5 to further support its position.
Applicable Authority and Discussion
Section 212.05, F.S., which levies tax on the sale, use, or consumption of tangible
personal property, provides, in part, the following:
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: . . .
(b) At the rate of 6 percent of the cost price of each item or article of tangible
personal
property when the same is not sold but is used, consumed, distributed, or stored
for use or
consumption in this state . . . .

Section 212.06, F.S., which addresses, inter alia, the imposition and collection of use tax,
provides, in part, the following:
(2)(b) The term “dealer” is further defined to mean every person, as used in this
chapter,
who imports, or causes to be imported, tangible personal property from
any state or foreign country for sale at retail; for use, consumption, or distribution; or
for storage to be
used or consumed in this state.

(g) “Dealer” also means and includes every person who solicits business either
by direct
representatives, indirect representatives, or manufacturers’ agents; by
distribution of catalogs or other advertising matter; or by any other means whatsoever,
and by reason thereof receives orders for tangible personal property from consumers for
use, consumption, distribution, and storage for use or consumption in the state; such
dealer shall collect the tax imposed by this chapter from the purchaser, and no action,
either in
law or in equity, on a sale or transaction as provided by the terms of this
chapter may be
had in this state by any such dealer unless it is affirmatively shown
that the provisions of this chapter have been fully complied with.

(4) On all tangible personal property imported or caused to be imported from
other states, territories, the District of Columbia, or any foreign country, and used
by him or her, the dealer, as herein defined, shall pay the tax imposed by this
chapter on all articles of tangible personal property so imported and used, the
same as if such articles had been sold at retail for use or consumption in this state.
For the purposes of this chapter, the use, or consumption, or distribution, or
storage to be used or consumed in this state of tangible personal property shall
each be equivalent to a sale at retail, and the tax shall thereupon immediately levy
and be collected in the manner provided herein, provided there shall be no
duplication of the tax in any event.

(8)(a) Use tax will apply and be due on tangible personal property imported or
caused to
be imported into this state for use, consumption, distribution, or storage to
be used or
consumed in this state . . . .

Section 212.08(7)(ddd) F.S., provides:
Advertising materials distributed free of charge by mail in an envelope.--Likewise
exempt are materials consisting exclusively of advertisements, such as individual
coupons or other individual cards, sheets, or pages of printed advertising, that are
distributed free of charge by mail in an envelope for 10 or more persons on a
monthly, bimonthly, or other regular basis.
Rule 12A-1.008(5), F.A.C., provides the following in part:
(a) Certain advertising materials are exempt from sales and use tax only if the
materials:

1. Consist exclusively of advertisements, such as individual coupons or other
   individual cards, sheets, or pages of printed advertising; and
2. Are distributed free of charge by mail in an envelope; and

3. The envelope contains advertisements from 10 or more persons (advertisers).

The Taxpayer cites State of California Regulation 1541.5, regarding “printed sales
messages.” Your letter speaks specifically of language contained in section (b) of the
regulation, which provides:
. . . tax does not apply to the sale or use of printed sales messages which are:
1) Printed to the special order of the purchaser;
2) Mailed or delivered by the seller’s agent or a mailing house acting as the agent
for the purchaser, thorugh the United States Postal Service or by common
carrier;
3) Received by any other person at no cost to that person who becomes the
owner of the printed material.
The California regulation has no bearing on the application of sales and use tax in
Florida. However, it might be helpful to compare the regulation with the Florida
exemption, for clarification.
Section 212.08(7)(ddd), F.S., provides an exemption for certain advertising materials that
are delivered free of charge by mail in an envelope. The language of the statute makes no
reference of printed materials “printed to the special order of the purchaser.” Nor does
the statute include reference to the materials being “[r]eceived by any other person at no
cost to that person who becomes the owner of the printed material.” In order for the
distribution of cash register tapes to be exempt from use tax, pursuant to the Florida
exemption, they must satisfy all of the requirements of the statute:
1.
2.
3.
4.
5.
6.

Consist exclusively of advertisements
Distributed free of charge
Distributed by mail
Distributed in an envelope
Contains advertisements from ten or more persons (advertisers)
Distributed on a monthly, bimonthly, or other regular basis.

Review of the cash register tapes and the information regarding distribution of the cash
register tapes provided by the Taxpayer indicates that they do not meet all the
requirements of the exemption. The cash register tapes are delivered free of charge to the
retailers and the end consumers. However, the cash register tapes are not distributed to
the end user in an envelope or by mail. The advertisements are handed to the customer as
they make purchases and receive a receipt of the purchase. The printing of the
customer’s receipt of the purchase also means that the materials distributed to the end
user do not consist exclusively of advertisements. Further, there is no indication that the
cash register tapes are distributed “on a monthly, bimonthly, or other regular basis,” or
that each distribution contains advertisements from ten or more advertisers.

The courts have consistently held that exemptions contained in taxing statutes are special
favors granted by the Legislature and should be strictly construed against the taxpayer.
See Department of Revenue v. Anderson, 403 So.2d 397 (Fla. S.Ct. 1981); Housing by
Vogue, Inc. v. Department of Revenue, 403 So.2d 478 (Fla. lst DCA 1981). Therefore,
the exemption of section 212.08(7)(ddd), F.S., would not apply to the cash register tapes,
because the requirements of the section are not specifically met.
Section 212.05(1)(b), F.S., imposes sales tax on tangible personal property that is used or
consumed in Florida. Section 212.06, F.S., provides that sales tax is collectable from all
dealers. This statutory provision defines “dealer” to mean every person who imports, or
causes to be imported, tangible personal property from any state or foreign country for
use, consumption, or distribution; or for storage to be used or consumed in this state.
This section further provides that use tax will apply and be due on tangible personal
property imported or caused to be imported into this state for use, consumption,
distribution, or storage to be used or consumed in this state.

The facts of the Taxpayer’s letter provide that it is selling advertising to Florida
businesses through independent contractors in this state. The advertisements are printed
on cash register tapes that the Taxpayer ships into Florida via common carrier to retailers
that are not charged for the cash register tapes. The Taxpayer is causing the cash register
tapes to be imported into this state for distribution in this state.
Conclusion
Based on the facts provided, the Taxpayer’s printed materials are not exempt from use
tax pursuant to section 212.08(7)(ddd), F.S. The Taxpayer is considered to be a “dealer”
that causes tangible personal property to be imported into Florida for distribution in
Florida, pursuant to section 212.06, F.S. The Taxpayer and Predecessor are required to
accrue and remit use tax for the distribution of cash register tapes in Florida. This
includes use taxes correctly paid to the State of Florida by the Taxpayer and Predecessor,
“starting with the collection period September 2007.”
This response constitutes a Technical Assistance Advisement under section 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 section 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 that 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 section 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,

Brinton Hevey
Tax Law Specialist
Technical Assistance and Dispute Resolution
850/488-7157
Record ID: 73275