Who owes Georgia tax on free printed advertising materials mailed or shipped to customers, company stores, and third-party retailers, and where is the tax sourced?

Plain-English summary

An off-road-parts retailer bought printed advertisements from an out-of-state printer that did not collect Georgia tax. The printer shipped the free materials directly to individual customers, the retailer's Georgia stores, and unrelated Georgia retailers.

The Department ruled that printed advertising is taxable tangible personal property even when given away. The retailer owed tax on materials delivered anywhere in Georgia, and the applicable rate came from the jurisdiction where the customer, store, or third-party retailer received them. If the printer did not collect the full Georgia tax, the retailer had to accrue and remit use tax.

The content and format did not change the result: materials with QR codes, as well as posters and banners, were taxable. Shipping, handling, freight, and other delivery charges entered the taxable sales price. Separately stated direct-mail postage could be excluded only when passed through dollar-for-dollar without markup.

What this means for you

Retailers and advertisers

Free promotional material is not tax-free merely because recipients pay nothing. Budget sales or use tax based on the Georgia destination of each shipment, including shipments to your own stores and third-party display locations.

Direct-mail buyers

Keep address-level delivery data and separate qualifying postage from other delivery charges. The postage exclusion applies only to direct mail and only when the printer passes it through without markup and separately states it.

Accountants and tax professionals

The purchaser's tax liability does not depend on whether the printer is located in Georgia. Credit prevents duplicate tax if the seller collects the proper amount; otherwise the purchaser must self-assess use tax on the sales price.

Common questions

Q: Are free advertising flyers taxable in Georgia?
A: Yes. Printed commercial advertising bought and given away is taxable tangible personal property.

Q: Which tax rate applies?
A: The rate for the jurisdiction where the printed material is delivered, whether to a customer, company store, or unrelated retailer.

Q: Does a QR code make the material electronic or non-taxable?
A: No. The printed material remains tangible personal property regardless of whether it uses a QR code instead of written prices or descriptions.

Q: Are posters and banners taxable?
A: Yes. Size and format did not change the taxability of the printed advertising.

Q: Are postage and delivery charges taxable?
A: Delivery charges generally are taxable. Qualifying direct-mail postage is excluded when separately stated and passed through dollar-for-dollar without markup.

Q: Can another advertiser rely on this ruling?
A: No. It is limited to the requesting taxpayer and facts, including the delivery arrangements and charge documentation.

Citations and references

Statutes and rules:

• O.C.G.A. § 48-8-30 (sales and use tax imposition and credit)
• O.C.G.A. §§ 48-8-2(10), (12), (31), (34), and (40) (direct mail, retail sale, sales price, and use)
• O.C.G.A. § 48-8-77(b)(1) and (d)(1)(C) (delivery-location and direct-mail sourcing)
• Ga. Comp. R. & Regs. r. 560-12-2-.75(b) (printing)
• Ga. Comp. R. & Regs. r. 560-12-2-.02(7) and (8) (commercial advertising and giveaways)
• Ga. Comp. R. & Regs. r. 560-12-2-.45 (delivery charges)

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2018-08

Original ruling text

Georgia Letter Ruling Number: LR SUT-2018-08
Topic: Use Tax, Advertising Material, Situs
Dated: July 5, 2018
This letter is in response to your letter ruling request regarding the application of Georgia sales and use tax to
advertising materials purchased and used in this state.
Facts as Presented by Taxpayer
[Redacted] (“Taxpayer”) is a dealer of off-road parts for certain vehicles. Taxpayer has retail locations in Georgia. On
occasion, Taxpayer purchases and distributes printed advertising materials (“Advertisements”) to inform customers
of new products, sale items, promotional events, etc. Advertisements are distributed to customers at Taxpayer’s own
retail locations as well as at third party retailers’ locations, such as car wash facilities. Advertisements are also
distributed by mail to individual customer addresses. In all cases, Advertisements are purchased by Taxpayer and
provided free of charge to the recipient. Advertisements are shipped by United States Postal Service or common carrier
directly from the printer to the receiving location based on an address list provided by Taxpayer. Currently, Taxpayer
is purchasing Advertisements from an out of state printing company that is not collecting tax and claims to have no
nexus in Georgia. Taxpayer is seeking guidance as to the correct application of tax on its purchases and use of
Advertisements in this state.
Issues

1. How is tax applied to Taxpayer’s purchases of Advertisements delivered to individual customer addresses when
   the printer utilizes a mailing list provided by Taxpayer?

2. How is tax applied to Taxpayer’s purchases of Advertisements delivered to Taxpayer’s own retail stores?

3. How is tax applied to Taxpayer’s purchases of Advertisements delivered to unrelated retailers?

4. How is tax applied to Taxpayer’s purchases of Advertisements having a bar code (commonly known as a “QR
   Code”) in lieu of written product price and description?

5. Are posters and banners that show/promote Taxpayer’s products considered Advertisements?

6. Would the tax treatment change if Taxpayer purchased its Advertisements from an in-state printing company (i.e.,
   any printing company that is obligated to collect Georgia sales and use tax)?

Analysis
Sales and Use Tax
Georgia levies and imposes a tax (subject to certain 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 or taxable services to any person other than for resale. 2 “Use” means the exercise of any
right or power over tangible personal property incident to the ownership of the property. 3
Georgia imposes a tax on the retail purchase of tangible personal property as well as on the use of tangible personal
property in this state.4 Use tax is a complement to sales tax and is due when sales tax was not fully collected on a
retail purchase of taxable personal property that is used, stored, distributed, or consumed in Georgia. The tax is
imposed regardless of whether the sale of the property occurs in Georgia or outside of Georgia. 5 However, use tax is
not meant to be a duplication of the payment of tax and, therefore, is subject to credit for like taxes previously paid. 6
O.C.G.A. §§ 48-3-1 and 48-8-30.
O.C.G.A. § 48-8-2(31).
3
O.C.G.A. § 48-8-2(40).
4
O.C.G.A. § 48-8-30.
5
O.C.G.A. § 48-8-30(c) and (c.1)(1). Subsection (c) addresses use, consumption, distribution, or storage within this
state and, unlike subsection (c.1), imposes a tax liability on the Georgia user without imposing a corollary collection
or remittance obligation on an out-of-state seller.
6
O.C.G.A. § 48-8-30(c)(3) and (c.1)(2).
1
2

Georgia Letter Ruling Number: LR SUT-2018-08
Topic: Use Tax, Advertising Material, Situs
Dated: July 5, 2018
Page 2 of 3
The sale of printing, including custom printing, is the sale of tangible personal property and is subject to tax on the
total invoice charge made on the transaction. 7 The tax applies to retail sales and uses of tangible personal property
commonly known as commercial advertising, including but not limited to catalogs, calendars, handbills, novelties,
etc. 8 The tax applies to purchases and uses of tangible personal property to be given away by persons in advertising
for the business or products. 9
Amount Subject to Tax
Sales and use tax is calculated on the sales price of the property purchased (i.e., the purchase price). 10 This amount is
the total amount of consideration for which the property is sold without any deduction for delivery charges. 11 Delivery
charges are part of the taxable sales price regardless of whether the charge is optional (i.e., not required to complete
the underlying sale of the tangible personal property) or separately stated. 12
The term “delivery charges” means charges by the seller for preparation and delivery to a location designated by the
purchaser. These charges include charges for shipping, handling, or freight. “Delivery charges” do not include postage
charges for the delivery of direct mail (i.e., printed material delivered or distributed by United States mail or other
delivery service to a mass audience or 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 billed directly to the recipients) when the postage charge is passed
on dollar-for-dollar without being marked up to the purchaser of the direct mail and is separately stated on an invoice
or other similar billing document given to the purchaser. 13 In other words, these specified postage charges for direct
mail delivery are not included in the sales price.
Sourcing Rules
Generally, sales of tangible personal property are sourced to the location where the purchaser, or the purchaser’s
donee, receives or takes delivery of the property. 14 Specifically, sales of advertising and promotional direct mail are
sourced to the jurisdiction to which the mail is to be delivered. 15
Taxpayer’s Advertisements
Generally, the retail sale of printed materials – including printed materials used as advertising – is the sale of tangible
personal property and subject to the tax. Such sales are subject to sales and use tax regardless of the size or content of
the printed materials, unless a specific exemption applies. Additionally, such sales are subject to sales and use tax
regardless of whether Taxpayer directs materials to be shipped to Georgia residents, its own Georgia stores, or other
Georgia business locations. Accordingly, Taxpayer is liable for tax on its purchase and use of Advertisements, and,
typically, the tax rate is determined by the jurisdiction where the materials are delivered.
If the appropriate amount of tax is not paid by Taxpayer to the seller at the time of purchase, Taxpayer must accrue
and remit use tax on the sales price of the purchase. Delivery charges associated with the purchase of Advertisements
are part of the sales price and subject to the tax. Postage charges associated with the purchase of direct mail are not
subject to tax when the printer passes on the postage charge dollar-for-dollar without being marked up to Taxpayer
and the charge is separately stated on the invoice or billing document issued to Taxpayer.

Ga. Comp. R. & Regs. r. 560-12-2-.75(b).
Ga. Comp. R. & Regs. r. 560-12-2-.02(7). But see O.C.G.A. § 48-8-3(61) (printed advertising inserts or advertising
supplements distributed in this state in or as part of any newspaper for resale are exempt from sales and use tax).
9
Ga. Comp. R. & Regs. r. 560-12-2-.02(8).
10
O.C.G.A. § 48-8-2(30). The terms “sales price” and “purchase price” have the same meaning.
11
O.C.G.A. § 48-8-2(34).
12
O.C.G.A. § 48-8-2(34)(A); Ga. Comp. R. & Regs. r. 560-12-2-.45.
13
O.C.G.A. § 48-8-2(10) and (12); Ga. Comp. R. & Regs. r. 560-12-2-.45(1).
14
O.C.G.A. § 48-8-77(b)(1).
15
O.C.G.A § 48-8-77(d)(1)(C).
7
8

Georgia Letter Ruling Number: LR SUT-2018-08
Topic: Use Tax, Advertising Material, Situs
Dated: July 5, 2018
Page 3 of 3
Rulings
1.

Taxpayer is liable for the tax on Taxpayer’s purchase and use of Advertisements delivered to individual customers
at Georgia addresses provided by Taxpayer. The sales price, which includes any associated delivery charges, is
subject to tax at the rate of the jurisdiction where the materials are delivered (the customer’s address). If Georgia
sales tax is not fully collected by the seller (printing company), Taxpayer must remit use tax to the Department.

2.

Taxpayer is liable for the tax on Taxpayer’s purchase and use of Advertisements delivered to Taxpayer’s own
Georgia retail stores. The sales price, which includes any associated delivery charges, is subject to tax at the rate
of the jurisdiction where the materials are delivered (the store). If Georgia sales tax is not fully collected by the
seller (printing company), Taxpayer must remit use tax to the Department.

3.

Taxpayer is liable for the tax on Taxpayer’s purchase and use of Advertisements delivered directly to third party
retailer locations in Georgia. The sales price, which includes any associated delivery charges, is subject to tax at
the rate of the jurisdiction where the materials are delivered (the retailer location). If Georgia sales tax is not fully
collected by the seller (printing company), Taxpayer must remit use tax to the Department.

4.

The retail sale and use of printed materials is subject to the tax, unless a specific exemption applies to the
transaction. Taxpayer’s purchase and use of printed materials is subject to the tax regardless of whether the
materials include a product price and/or description. Accordingly, the tax applies to the retail sale of
Advertisements having a QR Code.

5.

The retail sale and use of printed materials is subject to the tax, unless a specific exemption applies to the
transaction. Taxpayer’s purchase and use of printed materials is subject to the tax regardless of whether the
materials are calendars, cards, or flyers. Thus, the tax applies to the retail sale of Advertisements including posters
and banners.

6.

Because sales and use tax is levied and imposed on the retail purchase, retail sale, rental, storage, use, or
consumption of tangible personal property, Taxpayer’s liability, as the purchaser, for the tax in the abovedescribed transactions remains the same regardless of whether the seller (printing company) is located in Georgia
or out of state. If a seller collects the appropriate amount of tax from Taxpayer on a retail transaction, Taxpayer
owes no additional tax with respect to that transaction.

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. The facts herein are those presented by the
taxpayer and the Department accepts them as true for this ruling. If the facts presented herein change, are not true,
are different, or material facts have been omitted, the conclusions reached in this ruling may change. In addition,
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 tax treatment than that expressed in this ruling.