Which of a bulk-mailing company's services — labeling, sealing, stamping, inserting, sorting, imprinting — are subject to sales tax?

Plain-English summary

Skyview Graphics, Inc. runs a bulk-mailing service and asked which of eleven tasks are taxable. Most items it processes are printed by others; a small amount it prints itself, and mailings go to points inside and outside New York.

• The general rule. Producing, fabricating, processing, printing, or imprinting a customer's tangible personal property (not bought for resale) is a taxable service under § 1105(c)(2).
• The finishing/mailing carve-out. By longstanding policy (drawn from an expired NYC regulation), when performed on an ultimate consumer's property, the services of folding for insertion, sealing, affixing stamps, metering, mailing, and the cost of postage are not taxable if separately stated on the invoice.

Applying that split to the eleven services:

• Not taxable when separately stated — items (5), (6), (8), (9), (10), (11): affixing U.S. postage stamps; running envelopes through postage meters; inserting printed matter into envelopes; zip-code sorting; bagging and mailing; packing into cartons and shipping by common carrier.
• Taxable — items (1), (2), (3), (4), (7): gluing address labels ("cheshiring"); gluing on seals ("tipping"); gluing circular seals to self-sealing envelopes; imprinting customer marketing codes; imprinting indicia (e.g., "bulk fees paid," permit numbers).

The printer/mailer collection rules (Form ST-152):

• A mailer or printer-mailer must collect the statewide and local tax on printing, addressing, and other taxable charges for printed matter mailed to New York recipients, keeping records of what went in-state and out-of-state.
• Tax is due at the rate where delivery is made, on the entire charge, where printed matter is delivered to the customer in New York — even if the customer later sends some out of state.
• An alternative allocation method exists for mailings sent to both in-state and out-of-state destinations. But it cannot be used for printed matter needing clerical, office-typing, or computer-printing operations to prepare it for the individual recipient (invoices, statement forms, payment notices, letterheads, and items not interchangeable among recipients) — those are taxed at the point from which the mailing service occurs.
• On the information provided, how far the alternative method may be used could not be determined.

What this means for you

Sort your mailing tasks into "working the paper" versus "getting it in the mail." Services that alter or imprint the customer's printed matter (labels, seals, codes, indicia) are taxable; the downstream steps of inserting, sealing, stamping, metering, and mailing are not — but only if you separately state them.

Separate statement is the switch. The finishing/mailing carve-out depends on breaking those charges out on the invoice. Bundle them into a lump charge and you risk tax on the whole thing.

Where the mail is delivered drives the tax on printing/addressing. For matter delivered to a New York customer, collect at the delivery-point rate on the full charge even if some pieces later leave the state. An allocation method can help for mixed in/out-of-state runs, except for personalized items (invoices, statements) that must be prepared for a specific recipient.

Common questions

Q: We glue on address labels and imprint marketing codes. Taxable?
A: Yes. Cheshiring (gluing address labels), tipping (gluing seals), circular seals, imprinting marketing codes, and imprinting indicia are taxable services under § 1105(c)(2).

Q: What about inserting, sealing, stamping, metering, and mailing?
A: Those, plus postage, are not taxable when performed on an ultimate consumer's property and separately stated on the invoice.

Q: Some of our mail goes out of state. Do we still collect New York tax?
A: For printing/addressing on matter delivered to a New York customer, yes — at the delivery-point rate on the full charge, even if some pieces later leave the state. An alternative allocation method may apply to mixed in/out-of-state mailings, but not to personalized items (invoices, statements) requiring clerical or computer work for the individual recipient.

Citations and references

Statutes, regulations, and instructions:

• Tax Law § 1105(c)(2) — taxes producing/fabricating/processing/printing/imprinting a customer's tangible personal property
• 20 NYCRR 533.2(a)(1) — all receipts presumed taxable until the contrary is established
• Form ST-152 — Collection and Reporting Instructions for Printers and Mailers (delivery-point rate; alternative allocation method and its limits)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1987.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a86_51s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-86(51)S
Sales Tax
December 4, 1986

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S840719A

On July 19, 1984, a Petition for Advisory Opinion was received from Skyview Graphics, Inc.,
15 East Bethpage Road, Plainview, New York 11803.
The issue raised is whether certain services provided by Petitioner are subject to state and
local sales and use tax.
Petitioner performs a bulk mailing service in Plainview, New York and within that context
queries as to the taxability of the following services:
(1)

Glue address labels to material to be mailed (cheshiring);

(2)

Glue on seals to either media or mailing envelopes or both (tipping);

(3)

Glue on circular seals to self sealing envelopes in lieu of normal
envelope sealing;

(4)

Imprint customer marketing codes on reply cards, etc;

(5)

Machine or hand affix U.S. postage stamps to mailing envelopes;

(6)

Run envelopes through postage meters, using either customers' or own postage;

(7)

Imprint indicia on insert (imprint legend "bulk fees paid", "postage permit #", etc);

(8)

Insert printed matter into mailing envelopes;

(9)

Zip code sort inserted pieces;

(10)

Bag and mail; and

(11)

Pack completed envelopes into cartons and ship by common carrier. These items are
either mailed from foreign countries (e.g. Canada) or become part of a finished
product shipped or sold by Petitioner's customer (warranties, guarantees, proof of
purchase, etc).

Petitioner states that the mailings are made to points within and without New York State and
that most of the items processed are printed by others, however, a small amount is printed by
Petitioner.

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

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TSB-A-86(51)S
Sales Tax
December 4, 1986
Section 1105(c)(2) of the Tax Law imposes a sales tax on the receipts from every sale except
for resale of the services of "[p]roducing, fabricating, processing, printing or imprinting tangible
personal property, performed for a person who directly or indirectly furnishes the tangible personal
property, not purchased by him for resale, upon which such services are performed.
The services performed by Petitioner constitute the services enumerated as taxable in section
1105(c)(2) of the Tax Law. However, in administering this provision of the Tax Law, the State Tax
Commission has applied the following policy:
All services required to put written or printed matter in a completed state are
subject to tax. However, when performed upon the property of an ultimate consumer,
the receipts from the services of folding written or printed matter for insertion into
envelopes, sealing, affixing stamps, metering and mailing, and the cost of postage are
not subject to tax if the charges therefore are separately stated on any evidence of sale
rendered to the customer.
This policy was adopted from a portion of Article 78 of the Sales and Compensating Use Tax
Regulations of the City of New York which expired August 1, 1965.
Based on this policy, when separately stated on the invoice given to the customer, Petitioner's
services listed as items (5) (6) (8) (9) (10) and (11) are not subject to state or local sales and use tax.
Additionally, however, items (1) (2) (3) (4) and (7) are subject to state and local sales and use tax.
The Collection and Reporting Instructions for Printers and Mailers [ST-152 (5/71)] state in
part:
A mailer or printer-mailer is required to collect the statewide and appropriate
local sales taxes on his printing, addressing, and other taxable charges for printed
matter mailed to persons in New York State. The mailer or printer-mailer must
maintain records showing the portion of the matter he mailed to persons outside New
York State and destinations of all matter to persons in New York State.
The statewide tax and local sales taxes at the rate in effect where delivery is
made must be collected on the entire charge where printed matter is delivered to the
customer in New York State even if the customer will subsequently send some or all
of the matter to persons outside New York State.
In recognition of the unique problems presented by the imposition of the sales tax within the
mailing service industry, the Collection and Reporting Instructions for Printers and Mailers [ST-152
(5/71)] provide for an alternative method of computing the tax on certain mailings which are sent
to destinations both within and without New York State. This method provides for a means of
allocating the costs of the taxable mailing services between in-state and out-of-state destinations, as
well as among the various jurisdictions within New York State. [See ST-152 (5/71)]

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TSB-A-86(51)S
Sales Tax
December 4, 1986
However, the Collection and Reporting Instructions for Printers and Mailers [ST-152 (5/77)]
contain a caveat restricting the extent to which the alternative method may be applied. These
instructions state the following:
The alternative method set forth on Form ST-152 (5/71)] cannot be used with respect to
printed matter upon which clerical, office typing or computer printing operations are required in
order to prepare the printed matter in acceptable form for the individual recipient and to
accommodate the senders usual use of such items. Thus, printed items such as invoices, statement
forms, payment notices, letterheads, envelopes for correspondence, and items which by their contents
are not interchangeable with other recipients on the mailing list are subject to the New York State
sales tax in effect at the point from which the actual mailing service occurs.
In the absence of more explicit information as to the type of items mailed and the destinations
to which they are mailed, the extent to which the alternative method may be used by Petitioner
cannot be determined within the context of this advisory opinion.

DATED: December 4, 1986

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth herein.