Sales Tax State Activity Update - May 2005

Shopper Inserts in Florida Examined

In a Technical Assistance Advisement (TAA), the Florida Department of Revenue ruled that inserts, and insert envelope packages were exempt when properly labeled and distributed with a shopper publication.

Background

The taxpayer provides direct mail services to customers that distribute promotional materials to Florida residents.

In addition to the direct mail services, the taxpayer publishes a shopper publication in which customers can contract with the taxpayer to insert advertising supplements. The customer supplies the taxpayer with two types of inserts, some are labeled as part of the shopper, and others are not labeled as part of the shopper and only contain in-dates and version identification. The inserts are shipped directly by the customer's printer to the taxpayer.

A (subsidiary) franchisee of the taxpayer assembles an insert package that contains advertising inserts for many unrelated companies. Some of the insert envelope packages contain the shopper branding statement. Others only contain an in-home date and version identification. The taxpayer then produces the inserts pursuant to the franchisee specifications. After assembly, the inserts and envelopes are shipped to the taxpayer, and inserted into the shopper for distribution.

Issue

Do the inserts, and envelope packages qualify for the tax exemption?

Ruling

Pursuant to Section 212.08(7) (w), F.S. an exemption from tax is provided for free circulated publications commonly called shoppers. In this instance, the shopper met the requirements for the exemption. Rule 12A-1.008(4)(b), F.A.C. requires inserts to be labeled as part of the shopper in the masthead, logo, gang logo, or supplement line of the shopper. Inserts and insert packages that meet the labeling requirement are exempt. In this instance the inserts and insert package envelopes that only contain an in-house date and a version identification fail to meet the labeling requirement and are taxable.

The full TAA can be viewed here.

(Florida Technical Assistance Advisement 05A-015, 03/04/2005)

---

Subscribe to CyberTax News and receive the latest indirect tax news, including rate changes, rule updates, compliance issues, and more, delivered directly to your email.

Email Address