Were annual and individual sales of a monthly newsletter taxable even though it contained professional articles and was delivered by second-class mail?

Plain-English summary

The for-profit organization planned to sell a monthly publication by annual subscription. It contained articles, stories, and essays by educators, medical personnel, and other professionals, had no advertising, and was delivered by second-class mail to individual subscribers or in employer-distribution bundles.

Texas classified both subscription and non-subscription sales as taxable information services under §§ 151.0038 and 151.0101(a)(10) and Rule 3.342. The publication did not qualify as a magazine under § 151.320(b) or Rule 3.299(b)(1).

The publisher had to obtain a sales-tax permit and collect tax on Texas sales. Once its permit was issued or while the application was pending, it could give a resale certificate for printing costs attributable to copies intended for resale in the United States, its territories, or possessions.

What this means for you

Professional articles, annual subscriptions, and second-class delivery did not by themselves make this publication an exempt magazine. Its newsletter classification caused the sales to be treated as information services.

Common questions

Were annual subscriptions taxable? Yes. Were individual copies taxable? Yes. Did second-class mail make it a magazine? No. Could printing costs be bought for resale? Yes, for copies intended for resale under the stated permit conditions.

Citations and references

• Texas Tax Code §§ 151.0038 and 151.0101(a)(10) (information services)
• Texas Tax Code § 151.320(b) and Rule 3.299(b)(1) (magazine definition)
• Rule 3.342 (information services)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9110L1136A07

Original ruling text

October 2, 1991

Dear ***:

Thank you for your recent letter and the copy of the publication,
"***". According to the given facts, ** is a
for-profit organization that will sell "*" by annual
subscription. The publication is published monthly, and contains
articles, stories and essays by Texas educators, medical personnel
and otherprofessionals. The publication contains no advertising. It
is delivered via second class mail, either individually to subscribers
or in bundles (of 500, for example) for employers to distribute to
their employees. You ask whether tax is due on sales of "**."

Both non-subscription and subscription sales of "***" are
taxable as information services under Tax Code Sections 151.0038 and
151.0101 (a)(10), and Rule 3.342. The publication is not a magazine
as defined in Tax Code Section 151.320(b) or Rule 3.299 (b)(1).

*** is required to hold a sales tax permit and to
collect tax on Texas sales of this newsletter. Upon receiving its
permit (or while its permit application is pending), it may issue
a resale certificate instead of paying tax on the cost of printing
those copies that it intends to resell in the United States, its
territories or possessions. Under separate cover I have transmitted
a sales tax permit application packet, for your convenience.

This opinion is based on the facts presented. Different facts,
though similar, might lead to different answers. If you have further
questions, feel free to write or call me at 1-800-252-5555,
ext. 3-3889.

Sincerely,

John Christian
Attorney
Tax Administration Division