Ruling Request No. 93-03

Declaratory Rulings

Ruling Request No. 93-03

Re: Application of Sales/Use Tax to the Purchase and Distribution of Informational Brochures

Request for Ruling

Taxpayer requests a ruling regarding the applicability of the sales and use tax to the purchase and distribution of certain informational brochures.


The Company collects money from advertisers and prints an informational hand out, which is distributed free to the general public both in Rhode Island and out-of-state. Paid subscriptions are an immaterial part and are usually shipped out of state. The hand out contains advertisements along with articles and other information of public interest. The hand outs do not contain coupons or price lists, and have no resale value. The Company distributes the hand outs to hotels and tourist information booths throughout Rhode Island, Connecticut, and Massachusetts; those public establishments then distribute them for free to the general public along with other tourist information. The main objective of the hand out is to promote tourism in the State of Rhode Island.

Ruling Requested

Whether the Company is required to pay (1) sales tax on the purchase of the informational hand outs from its printer, or (2) whether the client is required to pay use tax on only those hand outs distributed within the State of Rhode Island and if so, based on what price?


In its request the taxpayer cites Paragraph A of SU 87-2 entitled "Advertising Materials" to support its position that no sales or use tax is due on the brochures. That part of SU 87-2 refers to advertising pamphlets and brochures or other items which accompany a product that is sold at retail. In this instance there is no product which is sold at retail so that Paragraph A of SU 87-2 does not apply.

The taxpayer also argues that it is rendering a service, i.e., the promotion of tourism, and as such, the "service" should be exempt from the sales/use tax. Assuming, arguendo, that a service is being performed, supplies and materials used in rendering a service are deemed to be consumed by the renderer of the service and as such are subject to tax measured by their costs.

Taxpayer's reference to Regulation SU 90-130 does not apply since that regulation applies only to newspapers and magazines sold at retail.


The Company is required to pay a sales tax upon purchase of its informational brochures from a Rhode Island printer whether or not such brochures are subsequently shipped out of state.

This ruling may be relied upon by this taxpayer and shall be valid until the applicable statutory provisions are amended in a manner requiring a different result or until the underlying factual presentation changes.

R. Gary Clark

Tax Administrator

March 10, 1993