Does placing print advertisements in Texas newspapers (including national inserts and free-standing inserts) create nexus requiring a mail order company to collect Texas sales tax?

Plain-English summary

This is a 1992 Texas Comptroller letter ruling, not about the internet (which barely existed commercially at that time) — it addresses print newspaper advertising by out-of-state mail order companies. The requester asked whether four specific advertising activities in Texas newspapers would create "nexus" (i.e., make the mail order clients "engaged in business" in Texas) such that they would have to collect Texas sales and use tax on their mail order sales into the state.

The four activities examined were:

1. Placing a one-page ad directly in a Texas newspaper;
2. Placing a one-page ad in a national publication (the letter gives Parade Magazine as an example) that is itself distributed inside Texas newspapers;
3. Placing an ad in a shared advertising booklet (bundled with other companies' ads) distributed with Texas newspapers; and
4. Placing a single-page, free-standing insert into a Texas newspaper.

The Comptroller's Tax Administration Division responded that none of these four advertising activities, standing alone, constitute "engaged in business" under the definition in the (then-current) September 1992 Sales Tax Bulletin. As long as the mail order clients had no other Texas activities that would independently create nexus, they were not required to collect and report Texas sales and use tax on their mail order sales into Texas. The letter notes this is based on the specific facts presented, and that other, similar facts could lead to a different result.

Important vintage/currency caveat: A modern "Alert" banner has been prepended to the top of the original text on STAR, noting that the 2018 U.S. Supreme Court decision in South Dakota v. Wayfair changed the legal landscape by letting states require economic-nexus collection from remote sellers with $500,000+ in Texas revenue (citing STAR document 201910005L for details). That Wayfair alert is not part of the original 1992 ruling — it's STAR's standard disclaimer added later to flag that pre-Wayfair "physical presence" nexus rulings like this one may be superseded by current economic nexus law.

What this means for you

Mail order / catalog businesses (historical context)

At the time this letter was issued (1992), simply advertising in Texas newspapers — even through national publications, shared ad booklets, or free-standing inserts distributed via Texas papers — did not by itself create Texas sales tax nexus for an out-of-state mail order seller. This reflects the pre-Quill/pre-Wayfair era "physical presence" nexus framework where advertising alone (without a Texas office, employees, or property) was not enough to require tax collection.

Businesses relying on this ruling today

Do not rely on this letter for current collection obligations. Since 2018, South Dakota v. Wayfair allows Texas to require remote sellers with $500,000 or more in Texas revenue over the preceding 12 months to obtain a use tax permit and collect Texas use tax, regardless of physical presence or advertising activity. See STAR document 201910005L for current economic nexus rules.

Accountants and tax professionals

This letter is a useful historical illustration of the "engaged in business" physical-presence nexus standard as applied to print advertising, but it predates both Quill Corp. v. North Dakota consolidation of the physical-presence rule and its 2018 overruling by Wayfair. Advise clients based on current economic nexus thresholds, not on this letter's advertising-nexus analysis.

Common questions (Q&A)

Q: Does this letter say anything about internet sellers?
A: No. Despite the filename/subject label mentioning "internet seller," the original 1992 letter only discusses print newspaper advertising (direct ads, national publications distributed in Texas papers, shared ad booklets, and free-standing inserts). The internet-related content on the page is a modern STAR alert banner about the 2018 Wayfair decision, not part of the original ruling.

Q: Did placing an ad in a Texas newspaper require a mail order company to collect Texas sales tax in 1992?
A: No, according to this ruling. The Comptroller found that none of the four described newspaper advertising methods, by themselves, made the mail order clients "engaged in business" in Texas.

Q: Is this ruling still good law today?
A: Not for determining current collection obligations. It reflects a pre-Wayfair physical-presence nexus standard. Since 2018, remote sellers with $500,000 or more in Texas revenue must collect Texas use tax regardless of advertising activity or physical presence — see STAR 201910005L.

Q: What activities were NOT addressed by this ruling?
A: The letter's response is expressly limited to the four advertising activities described and assumes the clients had no other Texas activities that would independently create nexus (such as Texas offices, employees, inventory, or representatives). Any other facts could produce a different result.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9211L1205A10

Original ruling text

Alert: On June 21, 2018, the U.S. Supreme Court issued a decision allowing states to require remote sellers that have an economic presence in the state to collect sales tax. See South Dakota v. Wayfair, 138 S. Ct. 2080 (June 21, 2018). Any remote sellers with $500,000 or more in total Texas revenue (during the preceding 12 calendar months) must apply for a use tax permit and begin collecting use tax by Oct. 1, 2019. For additional information, see STAR 201910005L.

November 3, 1992

Dear ***:

This is in response to your letter regarding whether your mail order clients'

advertising activities in Texas constitute nexus for purposes of collecting

sales taxes.

The specific activities are restated below followed by my response:

(1) placement of a one-page advertisement in a Texas newspaper;

(2) placement of a one-page advertisement in a national publication which is

distributed in Texas newspapers (e.g. Parade Magazine);

(3) Placement of advertising in a bound booklet (together with other

companies' advertisements) that is distributed with Texas newspapers; and

(4) A single page stand-alone advertisement (commonly called a free-standing

insert) that is inserted into a Texas newspaper.

RESPONSE: The four advertising activities listed above do not constitute

"engaged in business" as that term is defined in the enclosed September 1992

Sales Tax Bulletin. Assuming that your clients do not have any other activities

in Texas that would constitute "engaged in business", these clients are not

required to collect and report Texas sales and use tax on their mail order

sales into Texas.

This opinion is based on the facts presented. Other facts though similar may

provide a different result.

If you have other questions or need more information, you may call me at

1-800-252-5555, extension 3-4502. The regular number is 512/463-4600. You may

also write to Tax Ad Administration Division at the above address.

Sincerely,

Gilbert Zamora

Tax Administration Division