Technical Assistance Advisory No. 89-004 Re: Sales Tax On Advertisement And Home Shopping Sales Broadcast By Networks Recently, this office received a request for a ruling regarding the consumers sales and service tax or use tax implications of several specific types of transactions which radio and television broadcasting stations (stations) encounter. The following three scenarios were posed and an opinion requested regarding the consumers sales and service tax or use tax consequences thereof: 1. A station sells air time to advertise the sale of records or tapes. The purchaser sends order, check, etc. to the West Virginia station. The station acts as a "lock box", sending the order directly to outofstate seller. 2. A station sells air time, advertising sale of records/tapes. The purchaser sends checks to station. The West Virginia station handles the bookwork; keeps the money for those records/tapes (or maybe just a portion of it). 3. A West Virginia station sells a "shopping service" on the station from sign-off (1:30 am) to sign-on (5:00 am, as examples), during which time that service sells products which listeners/viewers purchase by sending money/credit card information, etc. directly to the shopping service out-of-state. The West Virginia station is paid for this air time through the shopping service's remittance of a percentage of their gross sales. West Virginia Consumer Sales and Service Tax and Use Tax Regulations, 110 C.S.R. 15, §
48 in part provides the following:§
110-15-48 Radio and Television Broadcasting Stations.48.1 Radio and television broadcasting stations who render advertising services, such as layouts or artwork, which are sold and delivered to customers but not associated with or an integral part of broadcast time at the station providing such services, are for the purpose of such sales engaged in rendering a service subject to the sales and service tax and use tax. However, such transactions which occur in conjunction with the sale of broadcast time at the station rendering such service are exempt. Sales of radio and television broadcasting time are exempt from the sales and service tax and use tax. West Virginia Code §
11-15A-6(a) requires that, "Every retailer engaging in business in this state and making sales of tangible personal property for delivery into this state, or with the knowledge, directly or indirectly, that the property is intended for use in this state, .
. shall at the time of making such sales, whether within or without the state, collect the tax imposed by this article from the purchaser." The definitions of "retailer" and "retailer engaging in business in this state" are defined as follows in W.
Va. Code §
11-15A-1:(7) "Retailer" means and includes every person engaging in the business of selling, leasing or renting tangible personal property for use within the meaning of this article, or in the business of selling, at auction, tangible personal property owned by the person or others for use in this state: Provided, That when in the opinion of the tax commissioner it is necessary for the efficient administration of this article to regard any salesmen, representatives, truckers, peddlers or canvassers as the agents of the dealers, distributors, supervisors, employees or persons under whom they operate or from whom they obtain the tangible personal property sold by them, irrespective of whether they are making sales on their own behalf or on behalf of such dealers, distributors, supervisors, employers or persons, the tax commissioner may so regard them and may regard the dealers, distributors, supervisors, employers, or persons as retailers for purposes of this article. (8) "Retailer engaging in business in this state" or any like term, unless otherwise limited by federal statute, shall mean and include but not be limited to any retailer having or maintaining, occupying or using, within this state, directly or by a subsidiary, an office, distribution house, sales house, warehouse, or other place of business, or any agent (by whatever name called) operating within this state under the authority of the retailer or its subsidiary, irrespective of whether such place of business or agent is located here permanently or temporarily, or whether such retailer or subsidiary is admitted to do business within this state pursuant to section forty-nine, article one, chapter thirty-one of this code. It is the position of the State Tax Department, that where a West Virginia radio or television station acts as a "lock-box" for orders directly sent to out-of-state sellers, or where the orders for merchandise are sent care/of the West Virginia radio or television station before being sent directly to out-of-state sellers, the station is a representative, peddler or canvasser of the "distributor," i.e. out-of-state seller. Transactions of that nature render such out-of-state sellers to be classified as "retailers" in West Virginia under W.
Va. Code §
11-15A-1(7) and result in the West Virginia radio or television station being classified as an "other place of business" in West Virginia under W.
Va. Code §
11-15A-1(8). Therefore, the out-of-state seller would be required to collect and remit use tax to West Virginia on all orders received through the West Virginia "lock-box" or forwarded "c/o" the West Virginia radio or television station. W.
Va. Code §
11-15A-6.In those situations where the West Virginia radio or television station handles the bookwork and accepts payment for the merchandise, keeping the money (or just a portion of the money), the station is deemed to be making the sale of that merchandise and must collect and remit consumers sales and service tax on such sales. The West Virginia radio or television station must collect sales or use tax in such cases, whether the order is filled from a stock of merchandise at the station or whether the merchandise is drop-shipped from outside of West Virginia by common carrier. In those instances where a West Virginia radio or television station is paid a fee for air time or receives a home-shopping services' remittance of a percentage of its gross sales to West Virginia customers, the State Tax Department will deem the station to be the sales agent of the home-shopping service, resulting in the home shopping service being liable for collection of West Virginia use tax on its sales to West Virginia customers. The taxpayer advisory letter relative to this issue was mailed prior to the passage of Committee Substitute S. B. 303 by the Legislature. If signed by the Governor, S. B. 303 will become law and the provisions in W. Va. Code §
11-15A-6a specifically relating to these types of sales will become effective July
1, 1989._________________________ Charles O. Lorensen State Tax Commissioner Date: April 14, 1989