Do materials that become part of a Texas newspaper lose their sales-tax exemption when the newspaper is distributed free?

Plain-English summary

The Texas Comptroller said the newspaper-component exemption still applied when the finished newspapers were given away rather than sold.

The letter quoted Section 151.319(6)(1) as exempting tangible personal property that enters into and becomes an ingredient or component part of a newspaper, whether or not the newspaper is printed for ultimate sale in Texas. It then said the fact that the newspaper was not sold at all did not void that exemption.

What this means for you

Newspaper publishers

Under this 1984 letter, free distribution by itself did not remove the exemption for qualifying property incorporated into a newspaper.

Suppliers and purchasing teams

The letter addressed property that becomes an ingredient or component part of the newspaper. It did not say that every purchase made by a publisher was exempt.

Accountants and tax professionals

The holding is historical and fact-specific. Confirm the current statute and rules before applying it to a present-day purchase.

Common questions

Q: Did the newspapers have to be sold for the component-material exemption to apply?
A: No. The letter said giving the newspapers away did not void the exemption.

Q: What property did the quoted exemption cover?
A: Tangible personal property that enters into and becomes an ingredient or component part of a newspaper.

Q: Did the letter exempt all costs of producing or distributing a newspaper?
A: No. It addressed the quoted exemption for ingredient or component property only.

Citations and references

• Section 151.319(6)(1) (quoted in the letter as the newspaper-component exemption)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8411L0597E02

Original ruling text

November 5, 1984

Dear ** :

Thank you for your recent letter regarding newspapers which are given away.

Section 151.319 (6) (1) exempts, "Tangible personal property that enters into
and becomes an ingredient or component part of a newspaper, whether or not the
newspaper is printed for ultimate sale in this state."

The fact that the newspaper is not sold at all would not void the exemption.
The new statute did not remove this exemption.

I am enclosing a copy of the statute, pamphlet supplement and rule 3.299 for
your future references.

This opinion is based upon the facts you presented. If there are additional
or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You may write
me, or call toll free 1-800-252-5555 from anywhere in Texas or phone
512/475-1931.

Sincerely,

Al Van Allen
Tax Policy Section
Tax Administration Division