Are free advertising publications, mailed print subscriptions, and digital-only subscriptions subject to Florida sales tax?

Plain-English summary

The Florida Department of Revenue exempted two business-to-business publications distributed free to qualifying recipients. They were circulated regularly, contained more than 50% advertising, and were delivered by mail, satisfying the five-part exemption in section 212.08(7)(w).

The exemption covered publishing and printing costs and component materials such as paper and ink. Paid hardcopy subscriptions were also exempt because the publications were delivered by mail.

Digital-only subscriptions were not taxable because the transaction transferred no tangible personal property. A combined digital-and-print subscription therefore remained exempt on these facts: the mailed print component qualified under the subscription exemption, and the digital component was not a tangible sale.

What this means for you

Publishers of free publications

Document that the publication is free, circulated, regular, primarily advertising, and distributed by an approved method. All five conditions must be met.

Subscription publishers

Mail delivery can qualify newspaper, magazine, and newsletter subscriptions for the print exemption. Digital-only access requires no tangible transfer under this ruling.

Accountants and tax professionals

Retain editorial calendars, sample issues, advertising ratios, mailing records, and subscription terms. The Department used those materials to verify the exemption.

Common questions

Q: Were printing costs for the free publications taxable?
A: No. The exemption covered printing and component inputs such as paper and ink.

Q: What did "primarily advertising" mean here?
A: The Department treated more than 50% advertising content as meeting the requirement.

Q: Were mailed hardcopy subscriptions taxable?
A: No, under the mailed-subscription exemption.

Q: Were digital-only subscriptions taxable?
A: No. No tangible item transferred.

Citations and references

• Fla. Stat. §§ 212.02(19), 212.05, 212.06(16)(a), 212.08(7)(w), and 213.22
• Fla. Admin. Code rr. 12A-1.008 and 12A-1.038
• Department of Revenue v. Val-Pak Direct Marketing Systems, Inc., 862 So. 2d 1 (Fla. 2d DCA 2003)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 18A-015

Original ruling text

QUESTION:
Is sales or use tax owed on the materials encompassed within the publications submitted for
review that are distributed free of charge?
ANSWER:
Based upon the facts provided, Taxpayer’s publications submitted for review that are
distributed free of charge are exempt from sales and use tax on the publishing or printing costs
of the publications or on items purchased, such as paper and ink, that are incorporated into and
become a component part of the publications, as provided in section 212.08(7)(w), F.S., and
Rule 12A-1.008, F.A.C.
QUESTION:
Is sales or use tax owed on the distribution of the publications submitted for review that are
distributed free of charge?
ANSWER:
Based upon the facts provided, the charges for fabricating the publications submitted for
review that are distributed free of charge are exempt from sales tax, pursuant to the exemption
in s. 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.
QUESTION:
Are sales of digital only subscriptions of the publications submitted for review subject to sales
and use tax?
ANSWER:
Based on the facts provided, the sale of a digital only subscriptions of the publications
submitted for review are not subject to sales tax, as there is not a transfer of a tangible item as
part of the transaction.

XXX
August 31, 2018
Florida Department of Revenue
Page 2

QUESTION:
Are sales of digital and hardcopy subscriptions of the publications submitted for review
subject to sales tax only on the allocable charges for the hardcopy portion of the sales
price so long as Taxpayer maintains sufficient accounting records to support the charges?
ANSWER:
Based on the facts provided, hard copies of the publications submitted for review are available
only through subscription and are delivered via mail to the Taxpayer’s clients. As such, charges
for the sale of hard copy subscriptions are exempt from sales tax pursuant to s. 212.08(7)(w),
F.S., and Rule 12A-1.008(3)(b), F.A.C. The sale of a digital only subscription of the publications
submitted for review are not subject to sales tax, as there is not a transfer of a tangible item as
part of the transaction.

August 31, 2018,
XX
Subject: Technical Assistance Advisement
STATUTE CITE(S): Sections 212.02, 212.05, and 212.08, Florida Statutes (F.S.)
RULE CITE: Rules 12A-1.008 and 12A-1.038, Florida Administrative Code (F.A.C.)
XXX, ("Taxpayer")
FEIN XXX
Dear XXX:
This is in response to your letter dated May 23, 2018, 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 the taxability of the publications submitted for review. 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.
Facts and Requested Advisement
Your letter provides the following in part:
. . . Taxpayer engages in the business of providing business to business newspapers. The
publication is sent on a regular bi-weekly basis and is available electronically and/or via

XXX
August 31, 2018
Florida Department of Revenue
Page 3

hardcopy nationwide. There are two types of newspapers sent. The first is called XXX,
which is sent free of charge to businesses that have a pharmacy . . .(e.g., XXX). The
second is called XXX, which is sent free of charge to various entities that are retailers
(XXX). The publication is only sent free of charge if the entity meets certain criteria. The
hardcopy version of the publication is printed in Wisconsin.
Taxpayer earns revenue from two sources. First, revenue is earned from advertisements
in the publications. This accounts for almost all of the revenue received by Taxpayer.
Second, revenue is earned from subscriptions by entities not meeting the criteria to
qualify to receive the publication free of charge, although this only accounts for less
than one percent of total revenues. Examples of entities not meeting the criteria to
qualify for a free subscription include banks and schools. The subscriptions available are:
(1) a digital only subscription, which is $119; (2) a digital/physical subscription for
manufacturers only, which is $149; or (3) a digital/physical subscription for any other
type of subscriber, which is $199.

. . . Taxpayer mails, by way of the United States Postal Service, the hardcopy
subscriptions to its clients. . . .

In response to the Department’s request for publication schedules, you provided copies of the
2016, 2017, and 2018 editorial calendars for both publications.
Law 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 defined in
s. 212.02(19), F.S., to mean “personal property which may be seen, weighed, measured,
touched or is in any manner perceptible to the senses . . . .” Rule 12A-1.027, F.A.C., provides
the sale of printed tangible personal property or graphic matter is subject to tax.
Printed publications are tangible personal property. The sale of a printed publication or the use
of a printed publication by a publisher is subject to tax, absent a specific exemption. 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 includes printing costs.
You have provided that the subject publications are provided “free of charge” to qualifying
business and that the publications are also sold via subscriptions in both digital and printed
copies. Section 212.08(7)(w), F.S., provides two exemptions pertinent to your request: an

XXX
August 31, 2018
Florida Department of Revenue
Page 4

exemption for certain sales of publications, as well as an exemption for certain publications
given away when specified criteria are met.
First, s. 212.08(7)(w), F.S., provides an exemption for “newspaper, magazine, and newsletter
subscriptions in which the product is delivered to the customer by mail.” So long as the
customer purchases a subscription to a publication and receives the product by mail, an
otherwise taxable newspaper, magazine, or newsletter, is not subject to sales tax.
Section 212.08(7)(w), F.S., also provides an exemption 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.”
In order to qualify for the latter exemption provided in s. 212.08(7)(w), F.S., the publication
must satisfy all of the following five discrete requirements:
1) “free”;
2) a “circulated publication”;
3) “published on a regular basis”;
4) composed of “primarily advertising”; and
5) “distributed through the mail, home delivery, or newsstands.”
We will analyze each requirement below:

1. Free
   Publications that are distributed free of charge and meet the other requirements under s.
   212.08(7)(w), F.S., are exempt from sales tax. Your letter provides that the majority of the
   subject publications are “free of charge” to qualifying business. The first requirement is met for
   the portion of the publications that are distributed free of charge.
2. Circulated Publication
   The court in Department of Revenue v. Val-Pak Direct Marketing Systems, Inc., 862 So.2d, 1, 3
   (Fla. 2nd DCA App. 2003), discussed the second requirement dealing with the meaning of the
   word “publication.” The court stated:
   When used as a concrete noun, publication is commonly understood to mean “a
   published work,” Webster’s Third New International Dictionary 1836 (1993) (emphasis
   supplied), or “an issue of printed material offered for sale or distribution,” The American
   Heritage Dictionary of the English Language 1464 (3d ed. 1992). As these definitions
   indicate, publication is a word commonly used to describe newspapers, magazines, and

XXX
August 31, 2018
Florida Department of Revenue
Page 5

books. . . . A publication is presented in an identifiable form as a work or an issue.
. . . Id. at 3-4.
XXX and XXX are circulated publications; therefore, the second requirement is met.

3. Published on a Regular Basis
   Although s. 212.08(7)(w), F.S., and Rule 12A-1.008, F.A.C., do not indicate what constitutes
   published “on a regular basis.” The term “regularly” is defined in Black's Law Dictionary 890
   (Abridged 6th ed. 1991) to mean “[a]t fixed and certain intervals, regular in point of time. In
   accordance with some consistent or periodical rule or practice.” In order to determine whether
   this criterion is met, the Department looks for a regular pattern of publication at fixed and
   certain intervals in accordance with some consistent practice.
   Review of the publication calendar reveals that the publications are published on consistent
   weekly intervals from year to year. The Publications are published on a regular basis, and the
   third requirement is met.
4. Composed of “Primarily Advertising”
   The term “advertising” is not defined in section 212.08(7)(w), F.S., or Rule 12A-1.008, F.A.C.
   However, the term “advertising” is defined, in part, to mean “[t]he action of drawing the
   public’s attention to something to promote its sale” in Black’s Law Dictionary 59 (8th ed.
   2004). The term “primarily” is defined as “for the most part” in Merriam-Webster Online
   Dictionary (2008). Generally, the Department considers a publication to be composed
   “primarily” of advertising in cases where greater than 50% of the publication is made up of
   advertising.
   Review of XXX and XXX, reveal that more than 50% of the publications are composed of
   advertisements. Therefore, the publications provided for review are “primarily advertising,”
   and the fourth requirement is met.
5. Distributed through the Mail, Home Delivery, Rack Machines, Newsstands, or Similar
   Method
   Distribution must be in a manner provided by the cited exemption. Your letter provides that
   the Taxpayer sends “by way of the United States Postal Service, the hardcopy subscriptions to
   its clients.” Therefore, the final requirement is met.
   Rule 12A-1.008(3)(c), F.A.C., provides that publishers and distributors whose business activity is
   limited to the tax exempt distribution of periodicals may issue an exemption certificate in lieu
   of paying tax for “publishing or printing costs of, or for the purchase of items, such as paper and

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August 31, 2018
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Page 6

ink, that are incorporated into and become a component part of, the publication.” The
distributor, if registered with the Department as a dealer, may present a copy of its Annual
Resale Certificate. If the distributor is not registered, it may provide an exemption certificate
pursuant to Rule 12A-1.038(5)(d)1., F.A.C.
Regarding digital copies of the publications, Florida courts have held that electronic images of
financial information displayed on a screen are not "tangible personal property," as defined in
s. 212.02(19), F.S. See Department of Revenue v. Quotron Systems, Inc., 615 So.2d 774 (Fla. 3rd
DCA 1993); Henley Holdings Inc. v. Department of Revenue, No. 89-4381 (Fla. 2d Cir.Ct. July 22,
1991), affd. 599 So.2d 1282 (Fla. 1st DCA 1992). The Department has cited Quotron, supra, and
Henley Holdings, supra, in regard to transactions involving only digital transmissions via the
Internet to a customer’s computer. The Department has determined that such sales, without
any other evidence of the transfer of something tangible, are not sales of tangible personal
property for purposes of ss. 212.02(19), and 212.05, F.S. Sales of digital transmissions instead
constitute services not subject to tax, pursuant to Chapter 212, F.S.
Conclusion
I. Is sales or use tax owed on the materials encompassed within the free [publications
submitted for review]?
Based upon the facts provided, Taxpayer’s publications submitted for review that are
distributed free of charge are exempt from sales and use tax on the publishing or printing costs
of the publications or on items purchased, such as paper and ink, that are incorporated into and
become a component part of the publications, as provided in section 212.08(7)(w), F.S., and
Rule 12A-1.008, F.A.C.

2. Is sales or use tax owed on the distribution of the free [publications submitted for
   review]?
   Based upon the facts provided, the charges for fabricating the publications submitted for
   review that are distributed free of charge are exempt from sales tax, pursuant to the exemption
   in s. 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.
3. Are paid digital only subscriptions of the [publications submitted for review] subject
   to sales and use tax?
   Based on the facts provided, the sale of a digital only subscriptions of the publications
   submitted for review are not subject to sales tax, as there is not a transfer of a tangible item as
   part of the transaction.

XXX
August 31, 2018
Florida Department of Revenue
Page 7

4. Are paid digital and hardcopy subscriptions of the [publications submitted for review]
   subject to sales tax only on the allocable charges for the hardcopy portion of the sales
   price so long as Taxpayer maintains sufficient accounting records to support the
   charges?
   Based on the facts provided, hard copies of the publications submitted for review are available
   only through subscription and are delivered via mail to the Taxpayer’s clients. As such, charges
   for the sale of hard copy subscriptions are exempt from sales tax pursuant to s. 212.08(7)(w),
   F.S., and Rule 12A-1.008(3)(b), F.A.C. The sale of a digital only subscription of the publications
   submitted for review are not subject to sales tax, as there is not a transfer of a tangible item as
   part of the transaction.
   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
Brinton Hevey
Tax Law Specialist
Technical Assistance and Dispute Resolution
Record ID: 80147