Sales Tax State Activity Update - November 2004

Mailing Lists May be Exempt in New York

Background
An Advisory Opinion issued by the Commissioner of Taxation and Finance ruled that mailing lists could be exempt if the material mailed qualified for an exemption from tax or is mailed out of New York. The exemption would also be extended to a purchaser that was an exempt organization.

The buyer wished to rent or license mailing lists for the purpose of delivering promotional materials to its customers or prospective customers. The promotional material may be printed or material upon which producing, fabricating, processing or imprinting services will have been directly performed. The buyer or a third party could do the printing or any of the previously mentioned services.

Analysis
Section 1115(n)(1) provides for an exemption of promotional materials mailed, shipped, or distributed from within New York to customers or prospective customers located outside of New York. Section 11115(n) (4) allows for exemption for printed promotional materials furnished free-of-charge, and delivered by the United States postal service or like delivery service. Section 1115(n) (2) provides that services relating to mailing lists or activities are not taxable when performed directly in conjunction with exempt promotional materials. Certificate of Exemption for Purchase of Promotional materials Form ST-121.2 should be used when claiming an exemption for printed promotional materials. Section 1116(a) (4) allows an exemption for those buyers that establish they are an exempt religious, charitable, educational, etc., institution. An Exempt Organization Certificate Form should be used when purchasing mailing lists.

Conclusion
When purchasing mailing lists, Section 1101(b) (12) defines advertising material to which the exemptions under Section 1115(n) apply. The interpretation of what is advertising material thus becomes relevant to obtain the exemption for mailing lists. Also, it is irrelevant if the qualifying promotional material is self produced or purchased from a third party.

His opinion may be viewed at: http://www.tax.state.ny.us/pdf/Advisory_Opinions/Sales/A04_20s.pdf (New York Office of Tax Policy Analysis Technical services Division, Advisory Opinion, TSB-A-04 (20) S September 2, 2004)

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