Current through Register Vol. 48, No. 38, September 20, 2024
a)
For taxable years ending on or after December 31, 2008, sales of services
(other than sales covered by IITA Section 304(a)(3)(B-1), (B-2) and (B-5)) are
in this State if the services are received in this State. The Department may
adopt rules prescribing where specific types of service are received,
including, but not limited to, broadcast, cable, advertising, publishing, and
utility service. (IITA Section 304(a)(3)(C-5)(iv)) This Section provides
guidance for determining where publishing services are received and applies
only to the gross receipts from publishing services of a taxpayer required to
source gross receipts under IITA Section 304(a)(3)(C-5) in computing its sales
factor.
b) Definitions. For
purposes of this Section, the following terms have the following meanings:
1) "Circulation factor" means, for each
individual publication by the taxpayer of published material containing
advertising, the ratio that the taxpayer's in-state circulation to purchasers
and subscribers of the published material bears to its total circulation of the
published material to purchasers and subscribers everywhere. If the geographic
location of purchasers and subscribers of a publication is determined by the
taxpayer for a business purpose (for example, in determining advertising
rates), the circulation factor shall be determined for that publication using
the geographic information used by the taxpayer for that purpose. Otherwise,
the circulation factor shall be determined from the taxpayer's books and
records or, if the books and records of the taxpayer are inadequate to allow
the determination of the circulation factor of a publication or if the taxpayer
so elects, the circulation factor for a publication shall be determined by
reference to the rating statistics as reflected in such sources as Audit Bureau
of Circulations, Internet World Stats, or other comparable sources, provided
that the source selected is consistently used from year to year for that
purpose.
EXAMPLE 1: Company A publishes advertising on the Internet
for its customers. In order to calculate its circulation factor, Company A
elects to utilize Internet World Stats. Company A determines its circulation
factor by multiplying Illinois' population by the Internet penetration
percentage of the United States, as reported on Internet World Stats, divided
by the combined populations of the jurisdictions in which Company A does
business multiplied by their respective Internet penetration percentages as
reported on Internet World Stats. Company A must use this method consistently
from year to year to compute its circulation factor.
2) "Publication" or "published material"
includes, without limitation, the physical embodiment or printed version of any
thought or expression, including, without limitation, a play, story, article,
column or other literary, commercial, educational, artistic or other written or
printed work. The determination of whether an item is or consists of published
material shall be made without regard to its content. Published material may
take the form of a book, newspaper, magazine, periodical, trade journal or any
other form of printed matter and may be contained on any property or medium
(including any electronic medium, such as, for example, the internet, but not
including any broadcasting medium governed by IITA Section
304(a)(3)(B-7)).
3) "Publishing" or
"publishing services" means deriving business income from publishing, selling,
licensing (other than licensing to another person for purposes of printing or
other publication of the licensed material by that person within the meaning of
IITA Section 304(a)(3)(B-1)) or distributing newspapers, magazines,
periodicals, trade journals or other published material. "Publishing" or
"publishing services" does not include delivery of materials published by a
third party, and does not include delivery of materials published by the
taxpayer when a separate charge is made for delivery. Fees for delivery
services performed by a taxpayer who is not itself the publisher of the
materials (such as a newspaper carrier) or that are charged separately by the
publisher are sourced under Section
100.3370(c)(5),
not under this Section.
4)
"Purchaser" and "subscriber" mean the individual, residence, business or other
outlet that is the ultimate or final recipient of the published material.
Neither term shall mean or include a wholesaler, retailer or other distributor
of published material.
c) Sales within this State from publishing
include:
1) Gross receipts derived from the
sale of published materials in the form of tangible personal property, as
provided in Sections
100.3370(c)
and
100.3380(c).
2) The portion of gross receipts derived from
sales of published materials in a form other than tangible personal property,
from advertising and from the sale, rental or other use of the taxpayer's
customer lists for a particular publication or any portion thereof attributed
to this State using the taxpayer's circulation factor for that publication
during the applicable tax period.
d) For the purposes of this Section, other
than sales of tangible personal property under subsection (c)(1):
1) Gross receipts from the performance of
publishing services provided to a corporation, partnership, or trust may be
attributed only to a state where that corporation, partnership, or trust has a
fixed place of business, as defined in Section
100.3405(b)(1).
(IITA Section 304(a)(3)(C-5)(iv)) When the circulation factor is determined by
a method other than the taxpayer's own books and records, this subsection
(d)(1) shall not apply.
2) If the
state where the publishing services are received is not readily determinable or
is a state where the corporation, partnership, or trust receiving the services
does not have a fixed place of business, the services shall be deemed to be
received at the location of the office of the customer from which the services
were ordered in the regular course of the customer's trade or business. (IITA
Section 304(a)(3)(C-5)(iv)) When the circulation factor is determined by a
method other than the taxpayer's own books and records, this subsection (d)(2)
shall not apply.
3) If the ordering
office cannot be determined, the publishing services shall be deemed to be
received at the office of the customer to which the services are billed. (IITA
Section 304(a)(3)(C-5)(iv)) When the circulation factor is determined by a
method other than the taxpayer's own books and records, this subsection (d)(3)
shall not apply.
4) If the taxpayer
is not taxable in the state in which the publishing services are received, the
sale must be excluded from both the numerator and the denominator of the sales
factor. (IITA Section 304(a)(3)(C-5)(iv)) See Section
100.3200
for guidance on determining when a taxpayer is taxable in a state.
EXAMPLE 2: In computing its circulation factor, Company A
from Example 1 must exclude from the denominator the population (weighted by
the Internet penetration percentage as reported on Internet World Stats) of any
jurisdiction in which Company A is not taxable.
