FIELD OPERATIONS HQ - RESPONSE TO TAXABILITY INQUIRY
      
      FIELD OPERATIONS NO. TR 1028                    DATE ISSUED  Jan 14, 1986
      
      TO ALL FIELD OFFICES:  The following taxability question was received 
from the Field 
      and the interpretation provided by Tax Policy - Tax Administration 
Division
      
      RE:     Preprinted Address Mailing Labels
              Rule
              Anne Glasco, *********
      
      Subject:        Taxpayer operates a mailing service.  As a part of this 
service, the
                      taxpayer purchases mailing labels, blank and preprinted 
with addresses,
                      to affix to their customer's printed material in order to 
prepare that
                      material for mailing.  The taxpayer does not provide any 
of the material
                      to be mailed which is always provided by the taxpayer's 
customer.  The
                      taxpayer's service consists of providing the addresses 
and labels,
                      affixing the labels, sorting and metering or affixing 
postage and
                      mailing.  The taxpayer bills the customer for this 
service in a lump sum
                      manner and charges no tax.  Upon examining the taxpayer's 
purchase
                      invoices, it was found that the taxpayer does not pay tax 
to the vendor or
                      accrue tax on the purchase of the preprinted address 
mailing labels.
      
                      The Texas vendor in this case has taken the position that 
the mailing
                      addresses, preprinted on the mailing labels, are not 
subject to sales tax
                      based on Hearing No. 9074.
      
                      Hearing No. 9074 says that names and addresses 
transferred on magnetic
                      tape, stick-em labels printed by computer, or a straight 
computer-printed
                      list are not taxable because the essence of the 
transaction is the
                      performance of a service.  The magnetic tape and 
computer-printed lists
                      have to be further processed (transferred to some other 
medium) before
                      they can be used.  The preprinted mailing labels need no 
further
                      processing and are ready for use as is, which we feel 
would be the sale of
                      tangible personal property.
      
      Question:       Would the sale of preprinted address mailing labels to a 
mailing service
                      be subject to tax?
      
                      If the mailing service separately billed their customer 
for the
                      preprinted address mailing labels, would this be subject 
to tax?
      
      Answer:         The sale of preprinted address mailing labels to a 
mailing service is
                      not taxable.  The act of preparing mailing labels is a 
nontaxable
                      service.  This taxpayer has purchased a nontaxable 
service (preprinted
                      address labels) from another supplier.
      
                      Had the mailing service purchased blank address labels 
and filled in the
                      addresses for their customer, the mailing service would 
owe tax on the
                      blank labels, as they would on other supply items.  They 
would not charge
                      their customer sales tax for filling in the labels, nor 
would they charge
                      sales tax for preprinted labels, even if separately 
stated.
      
      This opinion is rendered based upon the facts as presented.  Other facts, 
though 
      similar to those presented, may yield different results.
      
      APPROVALS: 
              Tax Division                            General Counsel
      sign                                    sign
      here                                    here
              Field Operations HQ             
      sign                                    sign
      here                                    here
      
      
ACCESSION NUMBER: 8601T0690A02 
SUPERSEDED: Y 
DOCUMENT TYPE: T 
DATE: 01/01/1986
TAX TYPE: SALES