Were advertising-space sales and printing costs for a free monthly community newsletter subject to Florida sales or use tax?

Plain-English summary

Florida reached two favorable but distinct conclusions for a 55-and-older community's free monthly newsletter.

First, selling advertising space was not taxable because advertisers received only the right to advertise, not tangible personal property.

Second, although a publisher's own use or giveaway of publications normally creates use tax on printing cost, this newsletter qualified for the free-publication exemption on the reviewed facts. It was free, circulated, published monthly, primarily advertising, and distributed to homeowners by mail. The ruling listed six requirements: the item must be free, circulated, a publication, issued regularly, composed primarily of advertising, and distributed through mail, home delivery, or newsstands.

The exemption was continuing and conditional. The publication had to keep satisfying all six requirements for later printing charges to remain exempt.

What this means for you

Advertising services can be nontaxable even when the publisher produces a physical publication. But exemption of the publication's fabrication or printing cost requires a separate, fact-specific test that must be met for each issue or continuing publication practice.

Common questions

Were charges for ad space taxable? No, because the advertisers received no tangible personal property.

Were printing charges exempt? Yes, based on the reviewed free monthly newsletter and its primarily advertising content.

Is every free newsletter exempt? No. It must meet all six distribution, frequency, content, and publication requirements described in the ruling.

Citations and references

• Fla. Stat. §§ 212.02, 212.05, 212.06(16)(a), and 212.08(7)(w), and Fla. Admin. Code rr. 12A-1.008 and 12A-1.038, as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10A-025

Original ruling text

SUMMARY
QUESTION:

1. Whether sales tax is imposed on the sale of advertisement space in Taxpayer’s community
   newsletter.
2. Whether use tax is due on the cost price of the Taxpayer’s printing of community newsletters.
   ANSWER: Sales tax is not imposed on the sale of advertisement space in the Taxpayer’s
   community newsletter because there is no tangible personal property sold to the advertisers.
   Based upon the facts provided, charges for fabricating the periodicals are exempt from sales tax,
   pursuant to the exemption in Section 212.08(7)(w), F.S., for 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, if the community newspaper consists
   primarily of advertisements. The exempt publication will need to continue to meet the
   requirements set forth in section 212.08(7)(w), F.S., and Rule 12A-1.008, F.A.C., in order for the
   exemption to apply.
   June 3, 2010
   XXX
   Re:

Subject: Technical Assistance Advisement (TAA) 10A-025
Sales and Use Tax – Advertisement and Publication Exemption
Sections 212.02(19), 212.05, 212.06(16)(a), and 212.08(7)(w), Florida Statutes (F.S.)
Rules 12A-1.008 and 12A-1.038, Florida Administrative Code (F.A.C.)
XXX (Taxpayer)
FEI #: XXX

Dear XXX:
This is in response to your letter dated March 15, 2010, requesting this Department’s issuance of
a Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule 12-11,
F.A.C., concerning advertisement and publication exemption. 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 for a TAA.
Issues

1. Whether sales tax is imposed on the sale of advertisement space in Taxpayer’s community
   newsletter.
2. Whether use tax is due on the cost price of the Taxpayer’s printing of community newsletters.
   Facts
   Taxpayer is a 55-years-old-plus community that prints and mails its own community newspaper
   monthly for free to its homeowners. Each issue of the community newspaper consists of

Technical Assistance Advisement
Page 2 of 4
approximately 30 pages comprised of advertisements, news, and calendar of events in the
community. Taxpayer sells advertisement space in the community newspaper to local
merchants, doctors, attorneys, realtors, etc.
Applicable Authority and Discussion
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. “Tangible personal property” is “personal
property that may be seen, weighed, measured, or touched or is in any manner perceptible to the
senses ....” Section 212.02(19), F.S.
The advertisers in this case do not receive any tangible personal property; rather, they are only
paying for a right to advertise in your community newspaper. Because the advertisers are not
receiving any tangible personal property, no sales tax is imposed on the advertising fee.
Section 212.06(16)(a), F.S., 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, which would include printing costs. However, a tax
exemption is available under Section 212.08(7)(w), F.S., for certain publications given away
when specified criteria are met. The criteria for exemption are outlined below. Publishers
whose business activity is limited to the tax exempt distribution of periodicals may issue an
exemption certificate, as provided in Rule 12A-1.038, F.A.C., stating that the publication is
exempt from tax pursuant to Section 212.08(7)(w), F.S., to the selling printer or publishing
company.
Tax exemptions are to be narrowly construed, and doubtful language should be construed against
the Taxpayer. Sebring Airport Auth. v. McIntyre, 642 So.2d 1072, 1073 (Fla. 1994); United
States Gypsum Co. v. Green, 110 So.2d 409, 413 (Fla. 1959). The exemption applies to “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.” See
Section 212.08(7)(w), F.S. Therefore, for the advertising materials to be exempt, they must
satisfy all of the six discrete requirements:
1) “free”;
2) A “circulated”
3) “publication[]”;
4) “published on a regular basis”;
5) Composed of “primarily advertising”; and
6) “distributed through the mail, home delivery, or newsstands.”
The following is an analysis based on The Royal Times of Kings Ridge (“Publication”),
February 2010 community newsletter:
1) Free
Each issue of the community newsletter is distributed to the homeowners of Taxpayer for free;
hence, the first requirement is met.
2) Circulated

Technical Assistance Advisement
Page 3 of 4
The newsletters are distributed to all homeowners; therefore, the newsletters are circulated and
meet the second requirement.
3) Publication
. . . [P]ublication is a word commonly used to describe newspapers, magazines, and
books. . . [P]ublication is not commonly understood as synonymous with printed
materials. A publication may consist of printed material, but not all printed material
constitutes a publication. A publication is presented in an identifiable form as a work or
an issue. A published work or an issue of a publication necessarily has a unitary physical
quality like the unitary physical quality of a newspaper, magazine, or book. . . .
Department of Revenue v. Val-Pak Direct Marketing Systems, Inc., 862 So.2d 1, 4 (Fla. 2 Dist.
Ct. App. 2003).
The Magazines are an identifiable form of work or issue with a unitary physical quality of a
newspaper or magazine; therefore, the third requirement is met.
4) Published on a Regular Basis
The term “regular” is not defined in section 212.08(7)(w), F.S., or in Rule 12A-1.008, F.A.C.
The term “regularly,” however, is defined in Black’s Law Dictionary 1156 (Special Deluxe 5th
ed. 1979) to mean “[a]t fixed and certain intervals, regular in point of time. In accordance with
some consistent or periodical rule or practice.”
The newsletters are published monthly; hence, the fourth requirement is met.
5) Composed of “Primarily Advertising”
Advertising is defined as “[a]ny oral, written, or graphic statement made by the seller in any
manner in connection with the solicitation of business and includes, without limitation because
of enumeration, statements and representations made in a newspaper or other publication or on
bill, sign, catalog, or letter ….” Black’s Law Dictionary 50 (Special Deluxe 5th ed. 1979). The
February 2010 community newsletter consists primarily of advertising; hence, the fifth
requirement is met.
6) Distributed through the Mail, Home Delivery, or Newsstands
The newsletters are distributed to the homeowners by mail; hence, the last requirement is met.
Conclusion
Sales tax is not imposed on the sale of advertisement space in the Taxpayer’s community
newsletter because there is no tangible personal property sold to the advertisers.
Based upon the facts provided, charges for fabricating the periodicals are exempt from sales tax,
pursuant to the exemption in Section 212.08(7)(w), F.S., for 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, if the community newspaper consists
primarily of advertisements. The exempt publication will need to continue to meet the
requirements set forth in section 212.08(7)(w), F.S., and Rule 12A-1.008, F.A.C., in order for the
exemption to apply.

Technical Assistance Advisement
Page 4 of 4
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,

Angel Sessions
Senior Tax Attorney
Technical Assistance and Dispute Resolution
(850) 922-4708
Record ID: 82925