Laws, Regulations and Annotations
Search
Business Taxes Law Guide—Revision 2024
Sales And Use Tax Court Decisions
A B C D E F G H I J K L M N O P R S T U V W Y
R
Redwood Empire Publishing Co. v. State Board of Equalization … (2001)
Classification of Shopping Guide as Taxable Publication Was Constitutional
Appellants were the printers and publisher of a shopping guide distributed without charge in Humboldt County. More than 90 percent of the shopping guide consisted of advertising. Sales and Use Tax Regulation 1590 provides that a nontaxable periodical does not include shopping guides or other publications of which 90 percent or more consists of advertising. Appellants contended that the Regulation 1590 classification of advertising publications as taxable was an infringement on freedom of speech, was a denial of equal protection, and was unauthorized by the Legislature.
The court of appeal held in favor of the Board. The court held that commercial speech was not entitled to the same degree of First Amendment protection as noncommercial speech, and that differential tax treatment of advertising publications was not content-based discrimination prohibited by the First Amendment.
The court also held that Regulation 1590 did not deny equal protection to the appellants. The regulation did not restrict or regulate in any manner their right to engage in commercial speech, but rather merely withheld from them a tax subsidy. Since the Legislature sought to subsidize and encourage publications which disseminate valuable and timely news and information, the Board could rationally conclude that publications which are mere conduits for advertising do not fit within the objective sought to be achieved by the tax exemption for newspapers and periodicals.
The court also held that Regulation 1590 did not exceed the Board's authority to adopt regulations to implement the Sales and Use Tax Law. It did not arbitrarily classify newspapers and periodicals, but instead only gave substantial meaning to the terms as they are used in Revenue and Taxation Code Section 6362. This interpretation was necessary in order to differentiate those publications from other printed matter subject to tax. The presence of advertising as a basis for the distinction was a reasonable classification method, and is also used by the U.S. Postal Service for the second class mailing privileges of periodicals. Redwood Empire Publishing Co. v. State Board of Equalization (1989) 207 Cal.App.3d 1334.