California Clarifies Sales Tax for Mixed Newspaper Subscriptions

California now requires publishers to determine if their newspaper sales are considered mixed newspaper subscriptions due to its effect on sales tax. “According to the regulation, ‘Mixed newspaper subscription’ means and includes a subscription for delivery of the print edition of a newspaper to a location provided by the customer and access to digital content from the newspaper publisher.” It was determined that the sale of the print edition of newspapers delivered to the customer is taxable, while access to the digital content is not. California provided a formula to determine the measure of tax for the sale of the print edition of the delivered newspaper when a mixed newspaper subscription rate (including nontaxable transportation charges and sales tax reimbursement) is used: Measure of Tax == [( × ) − ] / [(1 + )] where the abbreviations mean the following: MSR = Mixed Newspaper Subscription Rate, NTC = Nontaxable Transportation Charges, AP = Tangible Personal Property Allocation Percentage (Decimal form), TR = Applicable Tax Rate (Decimal form). For sales of mixed newspaper subscriptions on October 1, 2016, and forward, it is presumed 47% is applicable to the newspaper publisher’s tangible personal property (TPP) allocation in this formula and 53% toward non-taxable sales of digital content access. Satisfactory demonstration and records showing a lower TPP allocation will be accepted as a rebuttal for the presumed percentages. (California Code of Regulations, Title 18, Section 1590, effective immediately)

Posted on December 27, 2021