Upcoming CT DRS webinar: Select to register for the upcoming Income Tax Filing Overview Webinar on Wednesday, March 6, 2024 at 10:00 a.m. 

Ruling 90-30



You have asked for a ruling as to whether your client's participation in a direct mail advertising operation to Connecticut and other households is subject to the Connecticut sales and use tax.

You have further requested a ruling as to whether the subject services are related to media advertising. Further you have requested a ruling as to when and under what circumstances the above services, if taxable, would be subject to Connecticut sales and use tax.


Taxpayer is a Connecticut corporation which provides direct mail advertising services. It has a license agreement with a Florida corporation providing an assignment of certain territory for advertising purposes.

Taxpayer solicits businesses in the assigned territory to advertise the businesses' products or services via a collective direct mailing of brochures, coupons, flyers and similar advertising material to households.

Taxpayer assists the businesses in the preparation of advertising material. Taxpayer obtains a copyright on the advertising material it helps prepare. After agreement of the content of the advertising material the Florida corporation prepares the material. After customer approval, the advertising material is printed by the Florida corporation. The material is sorted, placed in envelopes and mailed from Florida to Connecticut households.

Taxpayer bills its customers on the material mailed to designated households. The Florida corporation bills Taxpayer for printing, envelope addressing, enclosing and postage.

There are variations of the above which relate to: the customer supplying advertising material; customer location out of state; mailing into another state.


The taxpayer's participation in a cooperative direct mailing of advertising material to Connecticut households is an advertising service. Such services are subject to Connecticut sales and use tax pursuant to Section §12-407(2)(i)(W) which provides as follows:

Advertising or public relations services, including layout, art direction, graphic design, mechanical preparation or production supervision, not related to the development of media advertising.

The taxpayer's services in this direct mail advertising enterprise are principally related to preparation and dissemination. Through its cooperative arrangement with a Florida company, this taxpayer arranges for the creation, preparation and distribution of material promoting a given customer's goods or services.

Advertising is generally regarded as the business of preparing and circulating advertisements. The taxpayers herein are both involved in the preparation and circulation of advertising material. A New Jersey case dealing with the taxation of advertising services as applied to direct mail advertising held that:

"advertising services" should not be limited to the creative services provided by advertising agencies and consultants. Dissemination is as essential as creation in advertising. Fisher-Stevens, Inc. v. Director of Taxation 121 NJ Super 513, 298 A 2d 77 (1972)

Having determined that the taxpayers are providing an advertising service, they have petitioned for a ruling finding that their services are related to media development. While media development is not defined in Connecticut Public Act 89-251, it has as its genesis the traditional division of the advertising industry into media and non-media (collateral) work1. The use of the term media is inextricably related to the concept of time and space. This concept relates to the formulation of an advertisement that is intended for mass audiences by charge for space as in newspapers and magazines or charge for time as in radio and television. The fees for Advertising services are related to charges for media placement.

The concept of media placement is fundamental to the role of an advertising agency. The debate in the State Senate relating to media advertising centered around the concepts of space and time with the bill's sponsor equating time and space with media. (See Journal of the Proceedings of the Connecticut State Senate, May 30, 1989, pp. 137-140).

The Department has previously defined media advertising as those services related to newspapers, magazines, radio, television and publicly displayed billboards and transit ads. Collateral material mailed directly to individual households is not regarded as media. It is hereby ruled that direct mail advertising does not come within the exception for development of media advertising.

A number of questions have been raised by the taxpayer relating to the taxation of direct mail advertising under a number of different scenarios. The essential question to be addressed is where the benefit of the advertising services is received. It is the benefit of the advertising services and not the performance of those services that is the subject of taxation. (See §12-411(1) "the acceptance or receipt of any services").

The receipt of any advertising services will depend upon the final destination or intended recipient of the advertising message. The taxation of advertising services rendered in Connecticut relates to those households in Connecticut where the direct mail advertising material is sent. It is hereby ruled that advertising material directed to Connecticut households is subject to the Connecticut sales and use tax whether or not the advertiser is located in Connecticut. The charges by the taxpayer herein related to the advice, development, creation and/or dissemination of advertising material to Connecticut households is properly subject to Connecticut sales and use tax.

The taxpayer's relationship with the Florida licensor corporation would make the latter's services subject to sales and use tax for advertising services rendered in Connecticut pursuant to §12-407(12) and §12-407(15).

James F. Meehan

March 6, 1990