Is advertising space sold in a monthly community newsletter subject to Utah sales tax?

Plain-English summary

A publisher of a monthly community newsletter wrote to the Commission after some confusion: before launching the newsletter, they'd been told by phone that advertising in it wasn't taxable, but months later they received a Sales and Use Tax Return form in the mail, prompting worry. A Commission staffer faxed them the relevant rule (Admin. Rule R865-19S-65) and flagged one open question: the rule's definition of "newspaper" requires publication "at short intervals, daily or weekly," and since the newsletter published monthly, it wasn't clear whether "monthly" counted as a "short interval." The publisher argued the rule's wording (with "daily" and "weekly" as examples, not an exclusive list) left room to interpret "short intervals" more broadly, and asked the Commission to confirm their advertising sales remained exempt.

The Commission's answer resolved the question in the publisher's favor either way — a notably efficient piece of reasoning that made the monthly-interval question moot:

• Under Admin. Rule R865-19S-65(C), advertising space sold in newspapers, magazines, or otherwise is not subject to sales tax.
• The newsletter likely qualifies as a "newspaper" under the rule's own definition: published at relatively short intervals (monthly), successive issues aren't compiled into a book, it's intended for general public circulation, and it covers matters of general interest.
• But even if a monthly interval were too long to count as "short intervals" under the newspaper definition, the publication would still qualify as a "magazine or otherwise" — and the exemption for advertising space covers that category too.
• Either way, the advertising space sold in the newsletter is not subject to sales tax.

The Commission added one caveat: the newsletter's advertisers still owe sales tax on items they use and consume to produce their own advertisement artwork, even though the ad space itself is exempt.

What this means for you

Newsletter, magazine, and small local publication owners

Advertising space sold in your publication is exempt from Utah sales tax regardless of whether your publication is technically a "newspaper" or a "magazine" — the rule's exemption reaches both categories (and a catch-all "otherwise"), so a close reading of the newspaper definition's publishing-interval requirement often isn't even necessary to reach the exempt result.

Publishers relying on informal phone guidance

This is a good example of getting an initial informal answer confirmed with a citation to the actual rule and, ultimately, a written ruling — the publisher did the right thing by following up in writing once uncertainty arose, rather than just continuing to rely on the earlier phone conversation.

Advertisers placing ads in newsletters/magazines

Don't assume every part of the transaction is tax-free just because the ad space itself is exempt — you still owe sales tax on supplies/materials consumed in producing your own ad artwork.

Common questions

Q: Is advertising space in a monthly (not daily/weekly) publication exempt from Utah sales tax?
A: Yes, according to this ruling — even if the "short intervals" newspaper definition doesn't clearly cover a monthly publication, the exemption still applies because the publication would fall under "magazine or otherwise," which is covered by the same exemption rule.

Q: Do advertisers owe any sales tax related to their newsletter ads?
A: The ad space itself is exempt, but advertisers must pay sales tax on items they use and consume to produce artwork for their advertisements.

Q: We got informal phone guidance that turned out to be uncertain later — what should we do?
A: Follow this taxpayer's approach: request a written advisory opinion citing the specific rule, so you have documented, reliable guidance rather than relying on a remembered phone conversation.

Citations and references

Statutes and rules:

• Utah Admin. Rule R865-19S-65(C) (advertising space in newspapers/magazines/otherwise exempt; newspaper definition)
• Utah Code Ann. § 59-12-103, § 59-12-104 (referenced in the taxpayer's request letter)

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/97-041.htm

Original ruling text

97-041

Response
July 16, 1997

June 24, 1997

Dear Ms. Rees:

Please find enclosed two copies of the most recent
issues of the NEWSLETTER. Before embarking on publishing this monthly community
newsletter, we contacted the Utah State Tax Commission and asked if there was a
sales tax on advertising in a publication such as ours. The answer was �no�
after those we had spoken to referred to whatever guidelines they had in front
of them. Then, this last week we received a Sales and Use Tax Return form in
the mail. We then called the State Tax Commission and spoke to NAME and he was
kind enough to FAX a page of the Tax Code regarding newspapers, magazines and
advertising. In R865-195-65, Section 59-12-103 and 59-12-104, it states,
"2. To be classified as a newspaper, the publication must appear to be a
newspaper in the general or common sense and must contain the following
elements: a. published at short intervals, daily or weekly; b. must not, when
its successive issues are put together, constitute a book; c. must be intended
for circulation among the general public; d. must contain matters of general
interest and report on current events.

It is our opinion that our publication fits all
criteria for not being subject to sales and use tax. NAME suggested that we
consult with you regarding Item a. published at short intervals, daily, or
weekly; He stated that since NEWSLETTER is published monthly that it was open
to interpretation if it qualified as being published at short intervals. We
understand that there is specific use and meaning of punctuation in writing
legal and tax code. It is clear to us that in the use of commas as they appear
in Item A.2.a., the terms daily, or weekly are not
exclusively descriptive of the term short interval, and the way it is
worded allows other interpretations of the term short intervals. Our first
issue was published February of this year and we have not collected sales tax
on the advertisements that have appeared in NEWSPAPER. We would appreciate your
interpretation of the Tax Code in relationship to our publication at this time.
We have been operating in accordance with the information we received over the
phone prior to our embarking on this venture. Please inform us of our
publication's status in terms of exemption from sales and use tax.

Thank you. Sincerely,

NAME

July
16, 1997

NAME

ADDRESS

CITY STATE ZIP

Advisory Opinion - Application of Sales Tax to Sales
of Advertising Space

Dear NAME,

We
have received your request for an opinion as to the taxability of the
advertisements in your publication, the NEWSPAPER. As we understand the facts, the NEWSLETTER
is a monthly newsletter published for the CITY area containing matters of general
interest to the community.

The
advertising space sold in the NEWSPAPER is not subject to sales
tax. Utah Administrative Rule
R865-19S-65C states that �advertising
space sold in newspapers, magazines, or otherwise is not subject to tax.� Your publication
probably falls under the definition of �newspaper� as outlined in Utah
Administrative Rule R865-19S-65(C), because it is published at relatively short
intervals (monthly), its successive issues are not put together in a book, it
is intended for circulation among the general public, and it contains matters
of general interest to its readers.

But
even if the NEWSPAPER did not fall under the definition of a newspaper,
that is, even if the monthly publication interval were too long to qualify it
as a newspaper, it would still qualify as a �magazine or otherwise.� Therefore, the advertising space is not
subject to sales tax.

Of
course, your advertisers must pay sales tax on items they use and consume to
produce the artwork (if any) used in their advertisements.

Please
let us know if you have any other questions.

For
the Commission,

Joe
B. Pacheco,

Commissioner

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