Indiana Mailing Service Pines Over the Fine Printing

Facts

The Taxpayer provides printing and mail processing services to its customers. The customer contracts with Taxpayer to print materials, which have no monetary value to the recipients, and mail them to recipients both inside and outside of Indiana. The mailing services the Taxpayer provides are: folding and inserting into envelopes, addressing the envelopes, sorting, and other mailing services necessary for the printed materials to be accepted as mail by the USPS. As part of the mailing service, the Taxpayer applies postage to each piece of mail, utilizing the Taxpayer's permit, meter, or stamps.

Issues

1. Are mailing services which are distinct and separate from the print manufacturing process services necessary to complete the sale"?
2. Are delivery services provided by the United States Post Office (USPS) to Taxpayer's customer, in exchange for postage payment, taxable as part of the sales price of printed materials?

Ruling

Services which are separately stated are typically not subject to taxation unless they are considered a unitary transaction as provided in IC 6-2.5-1-1(a). The Taxpayer's situation is one in which the phases of the transaction are not distinct and separate. In order to carry out the transaction, The Taxpayer must first print the materials then use those same materials for the next phase of the transaction, which includes folding and inserting the printed material into envelopes. If the services were distinct and separate, the Taxpayer would be able to perform the services required by the contract without first having to print the materials that are to be used in the folding and inserting services. Therefore, the services provided are subject to taxation as a retail unitary transaction pursuant to IC 6-2.5-1-1(a), IC 6-2.5-1-2, IC 6-2.5-4-1(e), and IC 6-2.5-2-1.

The full letter ruling can be viewed on the IN.gov Website.