95-055
Response
September 5, 1995
Request
XXXXX
Dear
XXXXX;
A
conflict of interpretation of the sales tax laws of Utah have occurred between
ourselves and a tax specialist of one of our customers. In calling the State Tax Commission, a
definitive answer could not be given and we were referred to you for a written
decision.
In
many cases, our company receives all of the products for processing from our
customers, after which we perform the addressing, envelope inserting, and
postage affixing to their product. We
have been informed by the Tax Commission that as long as we are not adding
tangible products to the customer's products, sales tax is not applicable.
Where
the dilemma has been created is that in the past the mailing list has been
supplied by the customer in the form of XXXXX labels in which we just adhered
them to the customer's mailing piece.
Technology has now evolved to ink jet addressing where the customer
supplies data via magnetic media at which time we address the mailing piece
with ink which we supply. The
customer's tax specialist claims that inasmuch as the value of the ink amounts
to less than three quarters of one percent of the service charge, it is not
considered tangible goods and therefore should not be taxed. Ever since we introduced ink jet addressing,
we have charged sales tax.
Would
you please forward us a written decision on this matter either by mail or fax
(XXXXX) at your earliest convenience.
If you need additional information, please feel free to call.
Sincerely,
XXXXX
XXXXX
RE: Advisory Opinion - Application of sales tax
to mailing services.
Dear
XXXXX,
We
have received your request for an opinion as to whether your company's charges
for addressing and mailing services are taxable. As we understand your operation, your clients provide you with
advertising materials and mailing lists.
Your company uses the customer supplied mailing list to address the
materials, then affixes postage and mails the advertisements. You company does not furnish the advertiser
with supplies. If these facts are
accurate, your company is engaged in a non-taxable service.
You
must pay sales tax on your purchase of ink or other supplies used in your
business. However, you need not charge
sales tax to your customers. The ink
used to address the materials is merely incidental to the non-taxable service
provided.
For
the Commission,
Alice
Shearer
Commissioner