A printer using offset litho (not web offset or rotogravure) asks: does a new 2001 exemption for out-of-state-mailed printed materials apply to its process, and does it change what it must collect on jobs bought from a sister company?

Plain-English summary

A printing company asked about a new law (described in the letter as Tex. Tax Code § 151.052, "Collection by retailer") effective September 1, 2001, which requires an exemption certificate from the purchaser when printed materials are mailed by the U.S. Postal Service to someone other than the purchaser. The company noted the exemption is defined around "web offset or rotogravure" printing processes, but its own shop uses offset litho instead, and asked two things: (1) does its process fall outside the exemption requirement, and where would it get the reporting form referenced by § 151.407; and (2) if it buys out a print job from a Texas sister company that DOES use web offset or rotogravure, does it need to collect tax from the end purchaser, or can it get an exemption certificate from the purchaser covering multistate mailing instead?

The Comptroller's answer: the exemption is strictly limited to web offset or rotogravure printing. Items printed on offset litho simply don't qualify -- the company's own process falls outside the exemption's scope entirely, meaning ordinary sales tax rules apply rather than this special exemption.

For the sister-company buyout scenario, qualifying for the exemption requires two things together: the printed materials must actually have been produced by a web offset or rotogravure process (which the sister company's job apparently was), AND the end purchaser must give the buying company a proper exemption certificate stating the materials are being mailed for multistate use and that the purchaser agrees to pay whatever state taxes are or may become due on them.

What this means for you

Commercial printers

This narrow exemption (for materials mailed to third parties, effective September 1, 2001) turns entirely on the printing process used -- web offset or rotogravure only. If your shop uses offset litho, digital, screen printing, or any other process, this specific exemption doesn't apply to your printed materials regardless of how they're mailed or distributed.

Printers who subcontract or buy out jobs from other print shops

Even when the underlying job was produced by a qualifying process (web offset or rotogravure) at another shop, you still need a proper exemption certificate from your own purchaser -- specifically stating multistate mailing and the purchaser's agreement to pay applicable state taxes -- before you can treat the resale as exempt.

Common questions

Q: Does the printed-materials mailing exemption cover offset litho printing?
A: No -- per this letter, it's limited to web offset or rotogravure processes only.

Q: If I buy a print job from another printer that used a qualifying process, is my resale automatically exempt?
A: No -- you also need the end purchaser to issue a proper exemption certificate confirming multistate mailing and their agreement to pay any state taxes due.

Q: Does this letter bind the Comptroller for my printing business?
A: No -- this is an informal 2001 letter answering one taxpayer's specific process and facts, not a modern Private Letter Ruling or General Information Letter, and it cannot be relied on by anyone else.

Citations and references

Statutes (as characterized in the original letter):

• Tex. Tax Code § 151.052 (the printed-materials exemption-certificate requirement discussed in this letter)
• Tex. Tax Code § 151.407 (report filing referenced by the taxpayer's question)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200109506L

Original ruling text

September 25, 2001

Dear **:

Thank you for your email inquiry concerning the following fact situation and
questions.

The new law 151.052 --Collection by retailer is requiring an exemption
certificate from the purchaser if the printed materials are mailed by the U.S.
Postal Service and sent to others than the purchaser. The printed materials
are defined as web offset or rotogravure printing process. COMPANY does not
use the two processes. Offset Litho is the process we use. Does this exempt
COMPANY from collecting this particular tax? If we are exempt, where do we
obtain a copy of the report that is to be filed provided by Section 151.407?

If we buy out a job from a TX Sister Company (a non-taxable purchase for
COMPANY) which uses the web offset or rotogravure printing process then must we
collect the tax from the end purchaser or obtain an exempt certificate from the
purchaser which states the printed materials to be mailed are for multistate
use and they agree to pay taxes due?

Response: The exemption under section 151.052 is limited to "printed
materials" that are produced by web offset or rotogravure printing processes.
Items printed on an offset litho do not qualify for this exemption.

In order to qualify for exemption on a job that you buy out from a sister
company, the printed materials must be produced by a web offset or rotogravure
printing process and the purchaser must issue your company an exemption
certificate stating that the printed materials to be mailed are for multistate
use and that the purchaser agrees to pay all state taxes that are or may become
payable.

A complete set of rules, along with the text of the Tax Code, and a wealth of
other information are available through our website at
through the "Texas Taxes" window.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, you may e-mail our tax help section at .
You may also call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Policy Division,
Comptroller of Public Accounts.

Sincerely,

Gilbert Zamora

Tax Policy Division