Florida, Missouri rule on taxing magazines: courts choose to tax newspapers instead of exempting magazines

Folio: The Magazine for Magazine Management, August 1, 1990 by Jan Jaben

NEW YORK CiTy-Debates over magazine sales taxes continue to bounce in and out of state courts. Most recently, the Supreme Courts o Florida and Missouri issued rulings affecting the application of sales taxes to magazines.

A related ruling from Iowa's chief court is expected shortly.)

The Florida Supreme Court, in agreement with Magazine Publishers of America and other parties, ruled that it is unconstitutional to apply state sales taxes to magazines and exempt newspapers. But, whereas magazine publishers had hoped the Court would also exempt magazines, it instead stated that newspapers would also be taxed.

Consequently, MPA, along with Time Inc. Magazine Co., The Hearst Corporation, Meredith Corporation and Golf Digest/Tennis, inc., has filed a motion for a rehearing with the Florida Supreme Court.

The motion calls for the Florida Court either to refund taxes previously paid by magazines or to assess retroactively past taxes due on newspapers.

Recently, the U.S. Supreme Court reversed a previous Florida Supreme Court decision in McKesson Corp. v. Division of Alcoholic Beverages and Tobacco.

McKesson, explains George Gross, MPA's executive vice president for public affairs, says "that in framing a remedy [in cases in which a tax scheme is unconstitutionally discriminatory], you ought to try to treat parties the same."

The Florida Supreme Court could take as long as six months to respond. And, according to Michael L. Rosen, a Tallahassee attorney who filed the motion, the court can deny the rehearing request, remand it to a lower court or overturn its remedy.

Meanwhile, the Missouri case may be nearing its culmination. Last November, the state's Supreme Court ruled in a suit brought by Hearst that the Department of Revenue had exceeded its authority in exempting newspapers from the sales tax for 55 years.

Again, Hearst had hoped that the Court would rule as courts in Tennessee, Texas and Louisiana had, exempting magazines as well as newspapers from the state sales tax. Instead, newspapers were held liable for three years' worth of back sales tax, according to Duane Benton, director of Missouri's revenue department.

However, at the urging of newspaper publishers in the state, a law was passed excusing newspapers from paying the back taxes "if, for two years, they don't raise any question of the unconstitutionality or validity of taxing newspapers," explains Benton.

The newspaper publishers have until July 13 to respond to the law.