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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 3375
Experience:  Over 20 Years experience
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Please help me understand if I have to collect sale taxes and

Customer Question

Please help me understand if I have to collect sale taxes and change my clients with sale taxes.
I operate a magazine business, I go to businesses and offer them to put their ad in my magazine if they like it they pay. I never collected sales taxes because is a service I offer. Somebody is saying that I am selling spots in a magazine i should be collecting taxes? my position is i am selling a service that is advertisement. please help
Submitted: 3 years ago.
Category: Tax
Expert:  R. Klein, EA replied 3 years ago.

R. Klein, EA :

Thank you for contacting me about your Tax issue. I will work hard to help you understand the issue clearly.

R. Klein, EA :

Maryland only taxes tangible personal property.

R. Klein, EA :

Advertising space is not a tangible, therefore it is not taxable. Nor is it a taxable service.

R. Klein, EA :

If you charge separately for production services or materials, those would be taxable services or items.

Customer : Mr. Klein, my main business is not selling the magazine itself but some people has paid to have extra copies of the magazine and I did charge for this. In the cover I put $5 per magazine. I sold 100 extra copies and I reported in my income taxes as income. If in the future I happen to sell this magazines in larger quantities. Should I charge sale tax? If so how much ? Thank you
R. Klein, EA :

Magazines ARE tangible property and therefore taxed, unless it qualifies as a newspaper

R. Klein, EA :

.04 Newspapers.

A. Printing and Sale.

(1) The printing and sale of newspapers that are distributed by the publisher at no charge are not subject to the sales and use tax.

(2) The sale of an item which is to be distributed as a component part of a newspaper, such as an advertising supplement, is not subject to the tax.

B. Requirements for Classification as a Newspaper.

(1) A publication is not a newspaper unless:

(a) It is published and distributed not less frequently than once each month;

(b) It does not, when its successive issues are put together, constitute a book;

(c) It is intended for circulation among the general public;

(d) It contains news items, legal and general intelligence, reports of current events, editorial comments, advertising matter, and other miscellaneous information of public interest generally found in an ordinary newspaper.

(2) The criteria set forth in §B(1) of this regulation are minimum requirements, the meeting of which does not necessarily result in a publication being classified as a newspaper. A publication which meets the criteria set forth in §B(1) of this regulation, but which is in fact a magazine, shopping advertiser, community newsletter, tip sheet, or other publication which is not a newspaper in the common and popularly accepted usage of the term, is not a newspaper for the purpose of this exemption. A publication is not disqualified solely because it is devoted primarily to matters of specialized interest, such as legal, mercantile, political, religious, or sporting matters.

C. The taxability of sales of photographic materials and certain other tangible personal property used in the printing of newspapers is described in Regulation .11 of this chapter.