Is a newsletter sold by subscription or single issue taxable in Texas, and are sales to governmental customers exempt?

Plain-English summary

A newsletter publisher wrote to the Comptroller asking whether its newsletter is taxable. The Comptroller answered that newsletters are taxed as information services under Rule 3.342 (a copy of which was enclosed with the letter). As a result, sales tax is due on both single-issue sales and subscriptions to the newsletter.

The letter also addressed the publisher's customer base. The publisher had listed several governmental entities among its customers — those sales are exempt from tax, and a purchase voucher from the governmental entity is sufficient proof of the exempt sale. Some of the publisher's other customers might also qualify for an exemption, but the publisher needs to obtain an exemption certificate from those customers to document the exempt sale (or can call the Comptroller's toll-free number to check a customer's exempt status).

What this means for you

Newsletter publishers and subscription-based businesses

If you sell a newsletter — whether by single issue or by subscription — expect it to be taxed as an information service under Rule 3.342, not treated as a tax-free product. Sales tax applies to both sale formats.

Businesses selling to governmental or exempt customers

Sales to governmental entities are exempt, and you can document that exemption with a purchase voucher from the entity. For other customers who claim exempt status, get an exemption certificate from them (or call the Comptroller's toll-free assistance line to verify status) before treating the sale as tax-free.

Accountants and tax professionals

This is a straightforward application of the information-services category (Rule 3.342) to a subscription/single-issue newsletter, paired with routine reminders on documenting exempt sales (governmental purchase vouchers vs. exemption certificates from other exempt customers).

Common questions

Q: Is a newsletter taxable in Texas?
A: Yes. The Comptroller ruled that newsletters are taxed as information services under Rule 3.342.

Q: Does it matter whether the newsletter is sold as a subscription or as single issues?
A: No — sales tax is due on sales of single issues or subscriptions alike.

Q: Are sales of the newsletter to government agencies taxable?
A: No. Governmental entities are exempt from paying tax on these sales, and a purchase voucher from the governmental entity is sufficient proof of the exempt sale.

Q: What about other customers who claim they're exempt?
A: The seller should obtain an exemption certificate from those customers to document the exemption, or call the Comptroller's toll-free tax assistance number (1-800-252-5555) to determine a customer's exempt status.

Q: Who can I contact with follow-up questions about this ruling?
A: The letter states that additional questions could be directed to Lindey Osborne in the Tax Policy Division at 1-800-531-5441, extension 5-0037.

Citations and references

• 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/9607L1418A02

Original ruling text

July 2, 1996

Dear ***:

Thank you for your recent letter. You asked whether your newsletter is
taxable.

Newsletters are taxed as information services. I have enclosed Rule
3.342 regarding information services for your review. Sales tax is due
on sales of single issues or subscriptions.

You listed several governmental entities among your customer base. These
entities are exempt from paying tax. A purchase voucher from a
governmental entity is sufficient proof of an exempt sale.

Some of your other customers may qualify for exemption, however you should
obtain an exemption certificate from these entities. You may call our
toll-free tax assistance number to determine the exempt status of a
customer. The number is 1-800-252-5555.

I hope this satisfactorily answers your question. If you have additional
questions, please contact Lindey Osborne in my Tax Policy Division. You
may reach Lindey at 1-800-531-5441, extension 5-0037.

Sincerely,

JOHN SHARP
Comptroller of Public Accounts

NOTE: Previous Accession Number 9607350L