14th Annual Printing Industry Tax Conference - Grant Thornton LLP

14 th Annual Printing Industry Tax Conference 

PRESENTER: 

Tony Montelisciani, Senior Manager – Cincinnati, OH 

Chicago, IL 

August 8, 2011 

© Grant Thornton LLP. All rights reserved.

Agenda 

• Sales & Use Tax 

– Updates by State 

• Streamlined Sales Tax 

– Membership 

© Grant Thornton LLP. All rights reserved. 1

Sales, Use, & Etc. Tax Updates 


Sales & Use Tax Updates - Alabama 

• Moral Law v. Alabama Department of Revenue, 

June 15, 2011 

– The court concluded that the sales tax 

exemption for in-state printers mailing to out-ofstate 

addresses under Ala. Admin. Code r. 810- 

6-1-.52 only applies when the printer is 

contractually obligated to both print and also 

mail the printed materials. 


Sales & Use Tax Updates - Arkansas 

• Arkansas House Bill 1547 

– Amends the sales and use tax laws to be 

consistent with the streamlined sales and use 

tax agreement. 

– The seller shall source the sale of taxable 

printing services resulting in the production and 

distribution of advertising and promotional direct 

mail according to Ark. Code Ann. § 26-52- 

521(b)(5). 


Sales & Use Tax Updates - Indiana 

• AOL, LLC v. Indiana Department of State Revenue 

(12/29/2010) 

• AOL distributed two types of promotional materials 

(free-of-charge) to members in several states, 

including Indiana. 

• CD ROM packages and Customer Marketing 

materials. 

© Grant Thornton LLP. All rights reserved. 

5



(12/29/2010) cont. 

• AOL argued that it entered into three separate transactions for 

production of the products. 

– (1) AOL purchased raw materials from several out-of-state 

vendors, who then copied AOL’s proprietary software and 

graphics onto the tangible personal property, (2) The 

assembly houses printed certificate numbers and passwords 

onto the components and assembled them into complete 

packages, and (3) The letter shops printed certain 

information onto paper supplied by AOL and distributed 

these materials to AOL’s members. 


6



(12/29/2010) cont. 

• According to Ind. Code Ann. § 6-2.5-3-6(b), two conditions must 

be met in order to incur a use tax liability in Indiana: 

(1) Taxpayer must have acquired tangible personal property 

in retail transactions and 

(2) Taxpayer must have then used, stored or consumed that 

tangible personal property in Indiana. 


7



(12/29/2010) cont. 

The Court ruled that in engaging an assembly house to 

assemble, print and ultimately mail a product to 

members, AOL purchased a service, not tangible 

personal property. 

Likewise, engaging letter shops to print and mail the 

the customer marketing materials, AOL purchased a 

service. 

Therefore, a retail transaction did not occur and the 

service would not be taxable in Indiana. 


8

Sales & Use Tax Updates – Iowa 

• In the Matter of Yellow Book Sales & Distribution Company 

Declaratory Order (2010). 

– Yellow Book Sales & Distribution Company contracts with third party 

printers, one of which is located in Iowa, to print and bind its 

directories that are produced and distributed, free of charge, to 

readers located throughout the US. 

– Yellow Book buys the paper it uses to produce the directories from 

paper mills located out-of-state and ships it to the printer's location 

on an as-needed basis. 

– The Court ruled that the purchase price of paper sold to Yellow 

Book and the sales price of the services of printing and binding 

furnished to Yellow Book are subject to use and sales tax 

respectively. 


Sales & Use Tax Updates - Kentucky 

• Kentucky House Bill 429 (03/15/2011) 

– Kentucky enacts several changes to conform its 

sales and use taxes to SSUTA by including a 

definition for "advertising and promotional direct 

mail" and providing sourcing rules for sales of 

advertising, promotional direct mail, and other 

direct mail. 


10

Sales & Use Tax Updates – Maine 

• Instructional Bulletin No. 30 (11/30/2010) and 

Instructional Bulletin No. 39 (12/10/2010) 

– Handling charges do not qualify as a transportation 

charge and are therefore included in the sales price. 

– Transportation charges are exempt when shipment is 

from retailer directly to purchaser, charges separately 

stated, and delivered by common carrier or United 

States Mail. All three conditions must be met for 

transportation charges to e excludible. 


Sales & Use Tax Updates – Minnesota 

• MN DOR 2011 Sales and Use Tax Legislative Bulletin 

(06/14/2011) 

– Minn. Stat. § 297A.668 subd. 7 was amended and a 

subdivision 7a was added to distinguish between 

"advertising and promotional" direct mail and "other 

direct mail" for purposes of determining sourcing. 


12

Sales & Use Tax Updates – New Jersey 

• Advo, Inc. v. Director, Division of Taxation 

(10/28/2010) 

– The Court ruled in favor of Advo, Inc. that the distribution 

of its Shop Wise publication met the definition of 

'newspaper' under N.J. Admin. Code § 18:24-1.2 for the 

period under review (2007) since the publication 

'generally conformed' to each of the criteria of the 

regulation as stated in 2007. 


13

Sales & Use Tax Updates – New Jersey 

• Advo, Inc. v. Director, Division of Taxation 

(10/28/2010) cont. 

– However, after the period that is relevant to this matter, 

the Director elected to amend N.J. Admin. Code § 18:24- 

1.2. Effective in 2010, the definition of newspaper for 

purposes of the Sales and Use Tax Act has been 

revised. The regulation now requires a newspaper to 

have the "main purpose" of distributing "news of current 

events (political, sports, entertainment, etc.)" and to 

contain "news of a general character and of a general 

interest." Advertising is not considered to be news of 

general character and of a general interest. 


14

Sales & Use Tax Updates – New York 

• TB-ST-620 (11/02/2010) 

– Purchases of ink, paper, and other tangible personal 

property that become a component part of a shopping 

paper, or the purchase of printing services to printing a 

shopping paper are not subject to sales tax. 

– Sales tax is not applicable on the sale of publications 

classified as newspapers or periodicals. The exemption 

also applies to charges for electronic versions. 


15

Sales & Use Tax Updates – New York 

• New York Department of Taxation & Finance 

Publication No. 831 (11/01/2010) 

– For advisement on sales that occur on and after 

December 1, 2010. Printed promotional 

materials delivered to points in New York by 

means other than US Postal Service or a similar 

delivery service are subject to tax. 


16

Sales & Use Tax Updates – Ohio 

• Ohio House Bill 153 (signed June 30, 2011) 

– Becomes effective September 29, 2011. 

– The bill contains a sales tax amnesty program and a consumer use 

tax amnesty program that will both be administered by the Ohio 

Department of Taxation. 

– Sales tax amnesty program: In effect May 1, 2012, through June 15, 

2012. Qualifying delinquent taxes for the program include all taxes 

due and payable as of May 1, 2011, that went unreported or 

underreported, and remain unpaid as of the program start date of 

May 1, 2012. Qualifying delinquent taxes do not include any tax for 

which a notice of assessment or audit has been issued. 

– The current sales tax voluntary disclosure agreement (VDA) 

program will remain in effect until May 1, 2012. 


17

Sales & Use Tax Updates – Ohio 

• Ohio House Bill 153 (signed June 30, 2011) cont. 

– Consumer use tax amnesty program: 

• In effect October 1, 2011, through May 1, 2013. 

Taxpayers in the program must pay the full amount of 

any outstanding consumer use tax liability from 

January 1, 2009, forward. 

• All delinquent consumer use tax liabilities, including 

penalties and interest, owed by the taxpayer before 

January 1, 2009, will be waived. 

• Taxpayers cannot participate if they have been 

issued an assessment on or before the effective date 

of the program. 


18

Sales & Use Tax Updates – South Dakota 

• South Dakota Sales Tax Facts (01/01/2011) 

– Charges by the newspaper to insert a publication or advertising flyer 

are not subject to sales tax. 

– The printing of advertising material that the printer does not place in 

the media is subject to sales tax. 

– Sales of magazines and similar publications are subject to the 4% 

state sales or use tax, plus any applicable municipal tax based on 

where the item is delivered. If the magazine is given away at no 

charge, the printing costs of the magazine are subject to tax. 


19


• Tax Facts Taxes on the Campaign Trail, South 

Dakota Department of Revenue (March 2011) 

– Fees to prepare and place an ad in the media are not taxable. 

– Fees to prepare the ad without placing it are taxable. 

– Fees paid to companies to print and mail advertising to SD locations 

are taxable. 

– Promotional items given free to the public are taxable when 

purchased. 


20


• Tax Facts - Printers and Newspapers (March 2011) 

– Please refer to for list of taxable printing and printing related 

services. Included are copying, binding, imprinting and printing. 

• Tax Facts - Direct Mail (March 2011) 

– Provides definitions and sourcing requirements for direct mail. 

– Direct mail services are subject to the state sales tax. 

– Email services, fax services and data processing services are 

subject to sales tax. Sales tax is based upon the location of delivery 

unless it is unknown; in this case, sales tax applies based upon the 

customer's location. 

– Brochures, flyers, and other printed materials are subject to sales 

tax. 


21

Sales & Use Tax Updates – Texas 

• Decision Hearing 102,191 (Feb. 16, 2011) 

– A printer was liable for sales tax on separate 

monthly fees it charged customers for storing 

excess printed materials not currently needed by 

the customers. 

– The storage, packaging and shipping of the 

excess materials were taxable, even if 

separately stated. 


22

Sales & Use Tax Updates – Wyoming 

• In the Matter of Yellow Book Sales & Distribution 

Company, Inc. (April 29, 2011) 

– A sale includes the fabrication of tangible personal 

property when materials are furnished by the purchaser. 

The printer produced a new product by converting raw 

products (paper stock and electronic data) into usable 

telephone directories. 


Streamlined Sales Tax Project 


SST Central Registration System 

• As of June 1, 2011 there were 1,573 companies 

registered on the central registration system. 

• As of March 31, 2011 those companies had 

collected $798.3 million in sales tax for the 

Streamline states. 


SST FACTS 

• To date, 24 of the 44 potential states have passed 

the conforming legislation. 

• Effective 8/1/2011 – Georgia was the last state to 

become a member. Georgia is now a Full Member. 


State Membership Status – January 1, 2011 

WA 

OR 

ID 

MT 

WY 

ND 

SD 

MN 

WI 

MI 

NY 

VT 

NH 

MA 

CT 

ME 

RI 

CA 

NV 

UT 

CO 

NE 

KS 

IA 

MO 

IL 

IN 

OH 

KY 

WV 

PA 

VA 

NJ 

DE 

MD 

DC 

AZ 

NM 

OK 

AR 

TN 

NC 

SC 

AK 

MS 

AL 

GA 

TX 

LA 

HI 

FL 

Full Member States 

Associate Member States – flex to full 

Advisory States – Not Conforming 

Non-sales tax states 

Project states – Not Advisory 

Non-participating state 


27

Thank you… 

14 th Annual Printing Industry Tax Conference 

Tax Professional Standards Statement 

This document supports Grant Thornton LLP’s marketing of professional services, and is not written tax 

advice directed at the particular facts and circumstances of any person. If you are interested in the subject 

of this document we encourage you to contact us or an independent tax advisor to discuss the potential 

application to your particular situation. Nothing herein shall be construed as imposing a limitation on any 

person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent 

this document may be considered to contain written tax advice, any written advice contained in, forwarded 

with, or attached to this document is not intended by Grant Thornton to be used, and cannot be used, by 

any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. 

© Grant Thornton LLP. All rights reserved.

14th Annual Printing Industry Tax Conference - Grant Thornton LLP

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