SALT Report 1896 – The Vermont Supreme Court ruled that coupon books that are distributed as inserts in free weekly newspapers and separately on news racks, are not exempt from Vermont sales and use tax as newspapers.
Vermont provides an exemption for newspapers under 32 V.S.A. § 9741(15) which states that, “Sales of newspapers and sales of tangible personal property which becomes an ingredient or component part of or is consumed or destroyed, or loses its identity in the manufacture of newspapers, whether sold or distributed without charge [are exempt from the sales and use tax]. A publication shall not be considered a newspaper unless, on an average for the taxable year, at least ten percent of its printed material consists of news of general or community interest, community notices, editorial comment, or articles by different authors.”
In their decision the Court noted the following differences between the coupon books and newspapers:
- The books are separately prepared and printed,
- The coupon books differed from the newspaper in size, format, and distribution,
- The coupon books were prepared and printed separately from the newspaper,
- The coupon books contained only advertising and no news content,
- The coupon books do not command their own following, and
- They were not separately indexed in the newspaper
Because of the many differences, the Court ruled that the taxpayer had not met its burden of proof in establishing that the coupon books meet the requirements for the newspaper exemption. Therefore, the coupon books are not newspapers, they are not “component parts” of the newspaper, and they are not property that is consumed or destroyed or loses its identity in the manufacture of newspapers. Consequently, the cost of printing the coupon books is not exempt from sales and use tax.
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