I print and mail direct-mail advertising to people in Virginia from out of state -- do I have to charge Virginia sales tax on that?

Plain-English summary

A printer located outside Virginia prints and distributes direct-mail advertising to individuals in Virginia, using mailing lists its customers provide. It asked the Department for a ruling clarifying whether these transactions are subject to Virginia retail sales tax.

Virginia exempts "advertising" -- defined to include the planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting, and other media, including concept, writing, graphic design, mechanical art, photography, and production supervision -- from retail sales and use tax. A Department regulation confirms that "media" specifically includes direct mail, alongside newspapers, magazines, billboards, radio, and television. Businesses that provide advertising are treated as the "user or consumer" of the tangible personal property (like printed materials) they purchase for that advertising -- meaning they generally pay tax on their own inputs rather than charging tax on the advertising service itself.

Applying this framework, the Department drew a distinction based on who the printer's actual customer is. If the printer's customers are advertising agencies located in Virginia, and the printer is simply selling printed advertising PRODUCTS shipped to those agencies, that sale is a taxable sale of tangible personal property. But if the printer is instead printing and mailing the direct mail advertising directly to individual end recipients in Virginia -- people who didn't request the printed materials themselves -- or is doing so on behalf of a customer that purchased the whole thing as an exempt advertising service, the transaction falls within the advertising exemption and is not subject to tax. As with any ruling request, the Department noted its answer is based on the facts as presented, and a change in facts could lead to a different result.

What this means for you

Out-of-state printers sending direct mail advertising into Virginia

Whether your sale is taxable depends on who you're actually selling to and what you're selling. Selling printed advertising products to a Virginia advertising agency is a taxable sale of tangible personal property. Printing and mailing direct mail as part of an advertising service -- especially where the end recipients are individuals who didn't order the printed materials themselves -- generally falls within Virginia's advertising exemption.

Advertising agencies and marketers who commission direct mail campaigns

If you purchase direct mail printing and distribution as an advertising service (rather than simply buying printed materials as a product), that service is generally exempt from Virginia sales tax under the advertising exemption -- but you and your printer may want to document the arrangement clearly to reflect that it's a service, not a sale of printed goods.

Anyone relying on this ruling for a similar arrangement

This ruling answers the specific fact pattern presented; if your printer sells directly to individual businesses (rather than through an advertising agency) or otherwise structures the transaction differently, the exemption analysis could come out differently.

Common questions

Q: Is direct mail advertising treated as "media" that qualifies for Virginia's advertising exemption?
A: Yes. Virginia's regulations specifically list direct mail alongside newspapers, magazines, billboards, radio, and television as "media" for purposes of the advertising exemption.

Q: I'm a printer selling direct mail materials to a Virginia advertising agency -- is that taxable?
A: Yes -- selling printed advertising products to an advertising agency located in Virginia is a taxable sale of tangible personal property, since the agency (not an end individual recipient) is your customer.

Q: I print and mail direct-mail advertising straight to individual recipients in Virginia who didn't request it -- is that taxable?
A: Generally no -- that falls within Virginia's exemption for advertising, since you're providing an advertising service delivered directly to end recipients rather than selling a printed product to an intermediary purchaser.

Citations and references

• Va. Code § 58.1-609.6(5) (retail sales and use tax exemption for "advertising" as defined in § 58.1-602)
• Va. Code § 58.1-602 (defines "advertising" to include planning, creating, or placing advertising in various media; advertising providers are the user/consumer of tangible personal property purchased for the advertising)
• 23 VAC 10-210-40 (defines "media" to include newspapers, magazines, billboards, direct mail, radio, television, and other communication modes)
• 23 VAC 10-210-41(B) (advertising businesses are users/consumers of tangible personal property purchased for use in their advertising business)
• P.D. 85-35 (2/28/1985), P.D. 93-41 (3/4/1993), and P.D. 10-73 (5/18/2010) (prior rulings on the sales tax treatment of direct mail advertising)

Subject

Exemption : Media - Direct mailing, Printing, Services, Out of state printer sending direct mail to end users in Virginia

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 22-99

Original ruling text

June 1, 2022

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of your anonymous client (the “Taxpayer”) requesting a ruling on the application of the retail sales and use tax on printed advertising delivered to customers in Virginia. I apologize for the delay in responding to your request.

FACTS

The Taxpayer, located outside of Virginia, engages in the business of printing and distributing direct mail advertising to individuals in Virginia based on a mailing list provided by its customers. The Taxpayer requests clarification concerning whether transactions involving the delivery of direct mail advertising to individuals in Virginia are subject to the Virginia retail sales tax.

RULING

Virginia Code § 58.1-609.6 (5) provides that the retail sales and use tax shall not apply to “[a]dvertising as defined in § 58.1-602.” Virginia Code § 58.1-602 defines advertising as:

…the planning, creating, or placing of advertising in newspapers, magazines, billboards, broadcasting and other media , including, without limitation, the providing of concept, writing, graphic design, mechanical art, photography and production supervision. Any person providing advertising as defined in this section shall be deemed to be the user or consumer of all tangible personal property purchased for use in such advertising. [Emphasis added.]

Title 23 of the Virginia Administrative Code (VAC) 10-210-40 defines the term “media” to include “newspapers, magazines, billboards, direct mail , radio, television, and other modes of communication.” [Emphasis added.] In addition, Title 23 VAC 10-210-41 (B) provides that: “Advertising businesses are engaged in providing professional services and are the users and consumers of all tangible personal property purchased for use in such businesses…” The regulation goes on to list various purchases and states that the tax applies to such purchases made by an advertising business.

Presuming the Taxpayer’s customers are advertising agencies, the sale of printed advertising products shipped to such agencies located in Virginia would be subject to the tax. If, however, the Taxpayer is printing and shipping the direct mail advertising to individuals in Virginia who did not solicit the printed materials or on behalf of customers that purchased the printed advertising, the sale would not be subject to tax. See Public Documents 85-35 (2/28/1985), 93-41 (3/4/1993), and 10-73 (5/18/2010).

This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department’s web site. If you have any questions about this response, you may contact * in the Department’s Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Craig M. Burns

Tax Commissioner

AR/3881.G

Related Documents

85-35

93-41

10-73