Must a company that prints and mails a client's monthly statements to Georgia recipients collect Georgia sales tax, when the client is located out of state?

Plain-English summary

A company formats, prints, and mails bills, monthly statements, and notices for its business clients. It has employees in Georgia (so it has a taxable presence here). Under one contract, it processes a client's data and prints and mails that client's monthly statements to the client's customers in Georgia. The tangible materials it uses — ink, paper, envelopes — are less than 10% of the contract price, and the client separately reimburses actual postage. The company asked whether it must collect Georgia sales tax on its charges to the client.

The Department worked through two steps. First, what is being sold? Even though the company says it isn't a "direct mail" business, the printed statements are direct mail: printed material delivered to addresses on a list provided by (or at the direction of) the client, where the cost isn't billed to the recipients. So the charges are sales of tangible personal property (direct mail), which are generally taxable. More precisely, statements and bills are "other direct mail" (informational), not advertising/promotional direct mail.

Second, where is the sale sourced? Georgia sources "other direct mail" to the purchaser's address in the seller's business records — i.e., the client's address — and a seller collects Georgia tax only on transactions sourced to Georgia. Here the client's business address is in Texas. So the sale is sourced out of state, and the company is not required to collect or remit Georgia tax on these charges, even though the statements physically land in Georgia mailboxes.

What this means for you

Print-and-mail and fulfillment companies

Printing and mailing customer statements or bills is a sale of "direct mail," not just a service — so it starts out taxable. But for "other direct mail" (bills, statements, notices, newsletters), the tax follows the client's address, not where the pieces are delivered. If your client is located outside Georgia, you generally won't collect Georgia tax, even for pieces mailed to Georgia residents.

Businesses buying print-and-mail services

Where your company is located drives the sourcing of "other direct mail." An in-Georgia client purchasing statement printing/mailing should expect Georgia tax; an out-of-state client generally will not be charged Georgia tax by the vendor — but may owe use tax in its home jurisdiction.

Accountants and tax professionals

This applies the direct-mail sourcing regime in O.C.G.A. § 48-8-77(d): "other direct mail" is sourced to the purchaser's address of record (absent bad faith), so the seller's collection duty exists only for Georgia-sourced transactions. Note the alternatives the ruling flags — a purchaser's direct pay permit or exemption certificate shifts the reporting duty to the purchaser and sources the mail to where it's delivered.

Common questions

Q: Are the printed monthly statements taxable?
A: They are sales of direct mail (tangible personal property), which are generally taxable. But whether Georgia tax is actually collected depends on where the sale is sourced.

Q: Why doesn't the company collect Georgia tax here?
A: "Other direct mail" like statements and bills is sourced to the purchaser's (client's) address. The client's address is in Texas, so the sale is sourced outside Georgia and the company is not required to collect or remit Georgia tax.

Q: Does it matter that the statements are delivered to Georgia residents?
A: No. For "other direct mail," the sourcing follows the purchaser's address, not the delivery address of the recipients.

Q: What is "other direct mail"?
A: Direct mail that is not advertising and promotional — including invoices, bills, statements of account, privacy notices, newsletters, and informational messages. It excludes incidental data processing services.

Q: What if the client gives a direct pay permit or exemption certificate?
A: Then the seller, absent bad faith, need not collect the tax; the purchaser reports and pays any tax due, and the mail is sourced to where it is delivered.

Q: Can another printer or client rely on this ruling?
A: No. It is binding on the Department only for the taxpayer and facts presented, and no other taxpayer may rely on it.

Citations and references

Statutes and rules:

• O.C.G.A. §§ 48-8-1, 48-8-2(31)(A), 48-8-30(a) (imposition of sales and use tax)
• O.C.G.A. § 48-8-2(12) (definition of direct mail)
• O.C.G.A. § 48-8-2(31), (33)(A) (definitions of retail sale and sale)
• O.C.G.A. § 48-8-77 (sourcing of sales; direct-mail sourcing rules)
• O.C.G.A. § 48-8-77(d)(3)(B) (definition of "other direct mail"); § 48-8-77(d)(2) (sourcing to the purchaser's address)
• Ga. Comp. R. & Regs. r. 560-12-2-.75(1)(a)-(b) (printed material and direct mail as taxable tangible personal property)

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2015-17

Original ruling text

Date Issued: November 3, 2015
Georgia Letter Ruling: LR SUT-2015-17
Topic: Direct Mail/Printing

This letter is in response to your request for guidance on the application of Georgia sales and use tax to the printing
and mailing of monthly statements mailed to Georgia addresses by Taxpayer on behalf of its client.
Facts
Taxpayer contracts with various companies to format, generate, print, and mail items such as bills, monthly statements,
and notices. Taxpayer is located in [location redacted], but has employees in Georgia and thus has a taxable presence
for sales and use tax purposes.
Taxpayer has entered into a contract to manage a client’s monthly statement printing and mailing, including data
processing and formatting, printing, and mailing monthly statements to the client’s customers in Georgia. The amount
billed to the client varies based on the number of records Taxpayer processes. The client pays Taxpayer the actual cost
of all postage. Based on current fair market values, the tangible personal property (ink, paper, envelopes) that Taxpayer
uses to provide its service comprises less than ten percent of the client’s total contract price. Taxpayer states that it is
not a direct mail company and does not sell printed material or other tangible personal property.
Issue
Is Taxpayer required to collect Georgia sales tax on charges to its client?
Analysis
Georgia levies and imposes a tax (subject to certain specific exemptions) on the retail purchase, retail sale, rental,
storage, use, or consumption of tangible personal property and on certain enumerated services.1 “Retail sale” means a
sale of tangible personal property for any purpose other than for resale. 2 “Sale” means any transfer of title or
possession, transfer of title and possession, exchange, barter, lease, or rental, conditional or otherwise, in any manner,
or by any means of any kind of tangible personal property for a consideration. 3
The sale of printed or copied material delivered in a tangible medium, including direct mail, is a sale of tangible
personal property and is subject to Georgia sales and use tax.4 “Direct mail” means “printed material delivered or
distributed by United States mail or other delivery service . . . to addressees on a mailing list provided by the purchaser
or at the direction of the purchaser when the costs of the items are not bill directly to the recipients.”5 Although
Taxpayer states that it is not a direct mail company, the monthly statements mailed out by Taxpayer are printed
material delivered to addresses on a list provided by or at the direction of Taxpayer’s client, and the cost of the items
is not billed to the statement recipients. Thus, the monthly statements fall within the definition of direct mail.
Sales of direct mail are sourced in accordance with O.C.G.A. § 48-8-77, which distinguishes between “advertising
and promotional direct mail” and “other direct mail” for purposes of sourcing. “Other direct mail” means “direct mail
that is not advertising and promotional direct mail” and includes invoices, bills, statement of accounts, privacy notices,
newsletters, and informational messages.6 Other direct mail does not include incidental data processing services. 7
Other direct mail is sourced to the location of the purchaser’s address available from the seller’s business records

1

O.C.G.A. §§ 48-8-1, -2(31)(A), -30(a).
O.C.G.A. § 48-8-2(31).
3
O.C.G.A. § 48-8-2(33)(A).
4
See generally Ga. Comp. R. & Regs. 560-12-2-.75(1)(a)-(b).
5
O.C.G.A. § 48-8-2(12).
6
O.C.G.A. § 48-8-77(d)(3)(B).
7
Id.
2

Date Issued: November 3, 2015
Georgia Letter Ruling: LR SUT-2015-17
Topic: Direct Mail/Printing
Page 2 of 2

maintained in the ordinary course of business when use of this address does not constitute bad faith.8 A seller of other
direct mail is only required to collect or remit Georgia sales and use tax on transactions sourced to Georgia. Taxpayer’s
sale of other direct mail (the monthly statements) is sourced to its client’s address available from Taxpayer’s business
records maintained in the ordinary course of business. In this case and based on the information provided, the client’s
address appears to be in Texas.
Ruling
Taxpayer’s charges to its client are sales of direct mail, which are generally taxable in Georgia. However, Taxpayer
must collect and remit Georgia sales and use tax only on transactions that are sourced to Georgia. If under the sourcing
rules described above, Taxpayer’s sale of direct mail is properly sourced to the client’s business address in another
location outside of Georgia, Taxpayer is not required to collect or remit Georgia tax on charges to its client for the
other direct mail items delivered in Georgia.
The opinions expressed in this ruling are based upon the information contained in your request and limited to the
specific transactions, facts, circumstances, and taxpayer in question. Should the circumstances regarding the
transactions change or differ materially from those represented, this ruling may become invalid. Subsequent statutory
or administrative rule changes or judicial interpretations of the statutes or rules upon which this ruling is based may
subject similar future transactions to a different tax treatment than that expressed in this ruling.

8

O.C.G.A. § 48-8-77(d)(2)(A), (b)(1)(C). Alternatively, if a purchaser of other direct mail provides the seller with a
direct pay permit or exemption certificate, the seller, in the absence of bad faith, is not required to collect and remit
the sales tax on the sale of the other direct mail. O.C.G.A. § 48-8-77(d)(2)(B). In that situation, the purchaser must
report and pay any tax due, and the sale is sourced to the jurisdiction to which the other direct mail is delivered.
O.C.G.A. § 48-8-77(d)(2)(C).