98-058
Response July 21, 1998
Request Letter
Utah State Tax Commission
ATTN: Sales and Use Tax Technical/Legal Division
REF: Taxability of Continuing Education Registration
Fees and Direct Mail Advertising Materials
Dear Sir/Madam:
Our accounting firm represents a corporation that
organizes and markets continuing education seminars throughout the United
State. We have several questions
concerning the taxability of registration fees and direct mail advertising
materials. Following is a brief
overview of the Corporation's activities and a list of the questions we would
like responses for.
The Corporation arranges professional education
seminars for attorneys, certified public accountants and similar professionals
throughout the county. In doing so, the
Corporation arranges for independent speakers to present these seminars and
hotel conference rooms in which to conduct the seminars.
Once a speaker, topic, and location has been
arranged, the Corporation solicits an audience through a direct mailing of
advertising brochures. The brochures
are developed, printed, and mailed from the Corporation's home state. Seminar
attendees send in a check and a registration form in response to the direct
mailing. At no time are the
Corporation's employees present in your state at the seminars or elsewhere to
solicit seminar attendance. All
solicitation is done by direct mail.
Physical presence of personnel in your state is limited to the
independent speakers who present the seminar and personnel from a temporary
service company who are contracted to provide check in o f registrants at the
seminar and to hand out the seminar materials.
Once an audience has been solicited, the Corporation
arranges for the attendees to receive copies of the speaker's outline for the
seminar. These outlines are prepared by
the independent speakers who present each seminar and are printed and bound in
the Corporation's home state. The
outline/manual is then mailed directly to the seminar location to be handed out
to the seminar attendees.
Given the above description of the Corporation's
activities in your state, our questions concerning the application of your
sales and use tax regulations are as follows:
1. Are the
registration fees for the continuing education seminars subject to sale tax in
your state?
2. If the
registration fee is not subject to sales tax, is the value of the speaker's
outline/seminar manual provided to attendees subject to a use tax?
3. If the
provisions of the outlines/manuals is subject to a use tax, how should the
value be established?
4. Is there
s use tax on the mailing of the advertising brochures, and is so, how should
the value of those brochures, in addition to the various costs of postage,
paper, ink, printing, supplies, etc.
5. If there
is a use tax on the direct mailing of advertising brochures, is there a De
Minimis threshold to establish nexus for the use tax?
Please be as detailed as possible in your
response. If you need further
information on which to base your response, please contact me for clarification
of the issues.
Please direct your reply to: NAME
Thank you for your time and assistance in this
matter.
Sincerely,
NAME
COMPANY
September
30, 1998
NAME
COMPANY
RE: Sales
and Use Tax Liability for Conducting Education Seminars in Utah
Dear Mr. Young,
We
have received your request for an advisory opinion concerning the Utah sales and
use tax consequences for your client, a corporation that apparently organizes,
markets, and conducts continuing education seminars in Utah. While you have not provided us with specific
details concerning the number and size of the seminars conducted in Utah nor
the amount of revenue produced in Utah, we assume there is sufficient contact
with Utah to impose nexus. Among the
reasons that nexus appears to exist is that the corporation does have
representatives in the state conduct the seminars (specifically independent
speakers and temporary contract personnel) and that the corporation rents or
leases space in Utah to provide a location at which to conduct the seminars.
We
shall address separately the five questions you have asked concerning the
possible tax liabilities associated with the corporation’s activities in
Utah.
1. Registration Fees. These fees are not subject to sales tax in
Utah.
2. Seminar Manual. Should the manual be charged to the seminar
attendee separately from his or her registration fee, it is subject to sales
tax. Should the manual be provided
without additional or separate charge, this transfer is not subject to sales
tax, but instead your client’s acquisition is subject to the use tax.
3. Manual Value. If the sale of the manual is subject to
sales tax, the sales tax is based upon the charge to the seminar attendee. If your client’s purchase of the manual is
instead subject to the use tax, the use tax is based upon the purchase price of
all components comprising the manual.
As the manual is printed and bound outside of Utah, let us point out
that Utah, like many states, has a reciprocity provision that allows a credit
for tax that is first due and properly paid in another state.
4. Advertising Brochures. The use tax would be based on the purchase
price of the materials used to produce the brochures that were sent into
Utah. The purchase of the mailing list
would not be considered part of the production cost and is not subject to Utah
use tax unless the corporation receives the list on labels which were then
placed on the mailings sent into Utah.
In this latter instance, the mailing list purchase price is considered
part of the production cost and is subject to Utah use tax. Please remember that the reciprocity provisions
also apply here.
5. De Minimis Treatment. In certain circumstances, there may be such
de minimis contact with a state that nexus does not exist. The facts, as stated earlier, suggest
otherwise for your client. Once nexus
is established, use tax is due on the direct mailing of advertising brochures,
even if the amount of that use tax is small.
Please
contact us if you have any other questions.
For
the Commission,
Joe
B. Pacheco, CPA
Commissioner
^^