Sales Tax State Activity Update - April 2004

Free Promotional Features Provided to Media Exempt in New York

A media relations company provided national news outlet networks with video and audio promotions, as well as news stories for use in television, radio and on the Internet.

It charged a fee to its clients for these promotions, but distributed them and the news stories free of charge to the media. The purpose of the free promotions and news stories was to create exposure for their clients so they can further distribute their products or services.

Copies of promotional features and news stories were sent to the clients for editing and archiving purposes only. Additionally, the taxpayer used wire feed and satellite uplinks to transmit news stories and charged their clients for these telecommunication services.

The media relations company (taxpayer) filed a Petition for an Advisory Opinion concerning the taxability of its fees. The New York Department of Taxation and Finance ruled that the taxpayer was not engaged in the production and sale of tangible personal property, and therefore its fees were not subject to tax. In addition the charges for wire feeds and satellite links are not subject to tax. The telecommunication services were only incidental to the taxpayers provision of advertising and public relations services.

( Gittelman & Co. , P.C. (Advisory Opinion), New York Commissioner of Taxation and Finance, TSB-A-04(4)S, February 26, 2004) 04/04

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