Does an out-of-state advertising firm owe Virginia use tax on the direct-mail postcards and letters it creates and has a third party print and mail to Virginia residents?

Plain-English summary

An out-of-state advertising business asked the Department whether Virginia's retail sales and use tax reaches its work. The business develops and creates direct-mail materials from data its customers supply, and it hires out-of-state vendors to print the postcards and letters and mail them through the U.S. Postal Service to Virginia consumers. The Commissioner ruled that, on these facts, it owes no Virginia sales or use tax.

Advertising services are exempt. Virginia does not tax "advertising," which the Code defines as 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 (Va. Code § 58.1-609.6 5; § 58.1-602). The regulations confirm "media" includes direct mail, and that the tax does not apply to an advertising business's charges for these professional services regardless of how they're billed or whether the business actually places the advertising (23 VAC 10-210-40; 23 VAC 10-210-41 A). So the taxpayer's creation and development of the direct-mail pieces is exempt.

The use-tax question — and why it comes out at zero. An advertising business is treated as the user or consumer of the tangible property it buys to produce advertising, including printed direct-mail items and mailing lists, and can owe use tax on that property (§ 58.1-602; 23 VAC 10-210-41 B). But Virginia use tax reaches only property used within Virginia (§ 58.1-604). Here the taxpayer, its facilities, and its third-party printer/mailer are all located outside Virginia, so the property is not used in Virginia and no Virginia use tax is due (P.D. 10-72, 10-73).

How this differs from the classic interstate-commerce ruling. The taxpayer pointed to P.D. 09-3, where a marketing business used the Postal Service to deliver direct-mail advertisements to Virginia residents; because title and possession passed outside Virginia and no use occurred in the state, that was non-taxable interstate commerce (23 VAC 10-210-780 A). The Commissioner noted P.D. 09-3 isn't a perfect fit — there the marketing business itself printed and posted the mailers, whereas here a third party does the printing and mailing. But the outcome is the same: because the taxpayer conducts its advertising activities from outside Virginia and its vendor prints and mails from outside Virginia, there is no Virginia use on the tangible property, and no Virginia use tax.

What this means for you

Advertising and direct-mail businesses

Your core service — creating and developing advertising, including direct-mail campaigns — is exempt in Virginia. The place to watch is the tangible property you consume to produce the ads (printed pieces, mailing lists): as the deemed consumer you can owe use tax on it, but only if it's used in Virginia. If you and your print/mail vendors operate outside Virginia and the materials are produced and mailed from outside the state, Virginia use tax generally doesn't reach the materials.

Out-of-state firms mailing into Virginia

Whether you or a third-party vendor handles the printing and mailing, the analysis turns on where the property is used. Materials created and mailed from outside Virginia, with no in-state use, don't generate Virginia use tax. Interstate-commerce precedent like P.D. 09-3 helps even when your facts aren't identical — but the safer anchor is the plain rule that use tax follows use in Virginia.

Tax professionals

Distinguish the advertising-services exemption (§ 58.1-609.6 5) from the use-tax-on-materials rule (advertising business as consumer, § 58.1-602 / 23 VAC 10-210-41 B). The materials rule only produces a Virginia liability when the property is used in Virginia (§ 58.1-604). Where the advertiser and its vendors are wholly out of state, both prongs come out non-taxable.

Common questions

Q: Are advertising and direct-mail creation services taxable in Virginia?
A: No. Planning, creating, and placing advertising — including direct-mail campaigns — is exempt "advertising" under Va. Code § 58.1-609.6 5 and § 58.1-602.

Q: I'm the "consumer" of the printed mailers I produce. Doesn't that mean I owe use tax?
A: Only if the property is used in Virginia. Virginia use tax applies to use occurring within the state (§ 58.1-604). If you and your printing/mailing vendor are outside Virginia and the materials are produced and mailed from outside the state, there's no Virginia use and no Virginia use tax.

Q: Does it matter that a third party — not me — prints and mails the pieces?
A: Not to the result here. The Department distinguished P.D. 09-3 (where the marketing business itself printed and posted the mailers) but reached the same conclusion: because everything happens outside Virginia, no Virginia use tax is due.

Citations and references

Statutes and regulations:

• Va. Code § 58.1-203 — Department's authority to interpret and enforce the tax laws
• Va. Code § 58.1-609.6 5 — exemption for advertising
• Va. Code § 58.1-602 — definitions of "advertising" and "use"; advertising business is the consumer of property bought for advertising
• Va. Code § 58.1-604 — use tax applies only to use occurring within Virginia
• 23 VAC 10-210-40, 23 VAC 10-210-41 — advertising services and media; use tax on property consumed in advertising
• 23 VAC 10-210-780 — sales in interstate commerce

Authorities the Commissioner relied on (described here, not linked): prior public documents that an out-of-state advertiser owes no Virginia use tax on materials not used in Virginia (P.D. 10-72, 10-73) and that direct mail delivered in interstate commerce is not taxable (P.D. 09-3, distinguished on its facts); and the strict-construction cases Commonwealth v. Community Motor Bus, 214 Va. 155 (1973), Commonwealth v. Research Analysis Corp., 214 Va. 161 (1973), and Golden Skillet Corp. v. Commonwealth, 214 Va. 276 (1973).

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 25-93

Original ruling text

June 27, 2025

Re: Ruling Request: Retail Sales & Use Tax

Dear * :

This letter is in reply to your request for a ruling on behalf of your client, (the “Taxpayer”), regarding the Virginia retail sales and use tax treatment of its advertising and direct mail advertising services.

This ruling is based on the facts presented as summarized below. Any change in facts or the introduction of new facts may lead to a different result.

FACTS

The Taxpayer, an out-of-state business engaged in advertising services, develops and creates direct mail materials based on data provided by its customers. The Taxpayer uses out-of-state vendors to print and perform the postcard and letter distribution through the United States Postal Service. The Taxpayer requests guidance as to whether its advertising services and direct mail marketing materials mailed to consumers in Virginia are subject to the Virginia retail sales and use tax.

RULING

Strict Construction of Exemptions

The Department has the authority to interpret and enforce the laws of the Commonwealth governing taxes in accordance with Virginia Code § 58.1-203. With regard to such interpretations, the settled caselaw requires strict construction of sales and use tax exemptions. Where there is any doubt as to the application of an exemption, the doubt is resolved against the one claiming the exemption. See Commonwealth v. Community MotorBus , 214 Va. 155 (1973); Commonwealth v. Research Analysis Corporation , 214 Va. 161 (1973); and Golden Skillet Corp. v. Commonwealth, 214 Va. 276 (1973).

Advertising

Virginia Code § 58.1-609.6 5 states that the retail sales and use tax shall not apply to advertising. Virginia Code § 58.1-602 defines advertising as:

[T]he 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.

Title 23 of the Virginia Administrative Code (VAC) 10-210-40 defines “media” as “newspapers, magazines, billboards, direct mail, radio, television, and other modes of communication. In addition, Title 23 VAC 10-210-41 A provides:

The tax does not apply to charges by an advertising business for professional services in the planning, creating or placing of advertising in newspapers, magazines, billboards, direct mail, radio, television, or other media regardless of how such charges are computed by the advertising business and whether or not such business actually places the advertising in the media.

Based on the description of the Taxpayer’s advertising services, transactions for such services would not be subject to Virginia sales tax.

Virginia Code § 58.1-602 and Title 23 VAC 10-210-41 B deem advertising businesses to be the user or consumer of all tangible personal property purchased for use in such advertising. Title 23 VAC 10-210-41 B states that the use tax specifically applies to the purchase of tangible personal property used in “printing, including direct mail items, non-customized or stock mailing lists, handbills, brochures, flyers, bumper stickers, posters and similar printed materials.” Therefore, the purchase of any tangible personal property used to create and develop direct print materials is generally subject to use tax.

However, an advertiser is only subject to the Virginia use tax as authorized by Virginia Code § 58.1-604, which requires use to occur within Virginia. Based on the facts provided, the Taxpayer, its facilities, and its third-party vendor are all located out of state. Based on the facts provided, the Taxpayer would not be subject to use tax on tangible personal property purchased to create the advertising since such property would not be used in Virginia. See P.D. 10-72 (5/18/2010).

Advertising Postcards

The Taxpayer states that the final product mailed to end consumers is a postcard or letter advertising products or services. The Taxpayer’s direct mail services are performed by a third-party vendor located outside of Virginia. The Taxpayer cites P.D. 09-3 (2/4/2009) to support its analysis that its direct mail advertising in interstate commerce is non-taxable. In P.D. 09-3, a marketing business used the United States Postal Service to deliver direct mail advertisements to Virginia residents on behalf of its customers. Because title of the mailers passed to customers outside Virginia, the Department concluded the transactions were not subject to Virginia sales and use tax. Consistent with Title 23 VAC 10-210-780 A, the Department ruled that, because title and possession of tangible personal property (e.g ., direct mail materials) took place outside of Virginia and no use was made in Virginia, the sales were deemed interstate commerce and not taxable. However, P.D. 09-3 is not directly applicable to the facts provided by the Taxpayer because a third party, rather than the Taxpayer, prints and posts the mailers.

In this case, the Taxpayer is providing advertising services and contracts with third-party vendors who print and ship direct mail advertising. As stated above, advertising businesses are deemed to be the user or consumer of all tangible personal property purchased for use in such advertising. See Virginia Code § 58.1-602 and Title 23 VAC 10-210-41 B. However, the Taxpayer would only be subject to Virginia use tax as authorized by Virginia Code § 58.1-604, which requires use to occur within Virginia. See P.D. 10-73. Based on the facts presented by the Taxpayer, it conducts advertising activities from outside Virginia and contracts with a third-party vendor that prints and mails the materials from outside of Virginia. Therefore, the Taxpayer would not be subject to Virginia use tax on the tangible personal property used in providing such services.

The Code of Virginia sections and regulations cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this ruling, you may contact * in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution Division, at or **.

Sincerely,

James J. Alex

Tax Commissioner

Commonwealth of Virginia

AR/4342.F

Related Documents

85-35

93-41

09-3

10-72

10-73

22-99