Virginia has enacted legislation extending an important sales and use tax exemption that impacts advertising businesses operating in the state. With the passage of Ch. 307 (H.B. 2675) and Ch. 318 (S.B. 871), the exemption for certain printed materials purchased by advertising businesses from Virginia printers, when those materials are distributed outside of the Commonwealth, has now been extended through July 1, 2028. The exemption was previously set to expire on July 1, 2025.
This legislative change is a welcome update for advertising businesses that rely heavily on print media as part of their broader marketing and outreach strategies, especially those with multi-state distribution. It reflects Virginia’s recognition of the role these businesses play in both the state’s economy and the regional advertising ecosystem.
What the Exemption Covers
The extended exemption specifically applies to printed materials purchased by any advertising business from a Virginia-based printer, so long as those materials are distributed for use outside of Virginia. These printed materials can include catalogs, brochures, promotional flyers, postcards, and other forms of physical advertising collateral.
It’s important to note that this exemption only applies when the printed items are destined for out-of-state distribution. If the materials are intended for use within Virginia, the exemption does not apply, and the transaction may be subject to retail sales and use tax.
This distinction is key for businesses with operations spanning multiple states. Proper documentation and compliance are necessary to support exemption claims and avoid potential liabilities in the event of an audit.
Legislative Background and Policy Intent
The original exemption was enacted to support Virginia’s printing and advertising sectors by encouraging businesses to source print production locally, even when the final distribution is interstate. The rationale is that such transactions bring value to the Virginia economy by sustaining jobs and business activity in the printing industry, without undermining the state’s tax base (since the materials are used outside the Commonwealth).
The extension through July 1, 2028, provides stability and planning flexibility for advertising firms. Businesses now have an additional three years to benefit from the tax savings associated with this exemption. This extension also indicates legislative support for preserving a competitive business environment in Virginia’s advertising and print sectors.
Compliance Considerations
While the exemption presents a significant opportunity for cost savings, it also comes with compliance responsibilities. Advertising businesses must ensure that the documentation associated with each exempt transaction is complete and accurate. This typically includes:
- Invoices clearly identifying the printer and buyer,
- Proof of out-of-state distribution (e.g., shipping documentation, client contracts, or delivery records), and
- Proper exemption certificates or related documentation as required by Virginia tax authorities.
Failure to maintain adequate records can result in the disallowance of the exemption during a tax audit, potentially leading to unexpected tax assessments, penalties, and interest.
Moreover, the nature of advertising operations, often involving multiple vendors, states, and distribution methods, can make tracking exemption eligibility complex. That’s why having a solid system in place and the support of knowledgeable tax professionals is critical.
How Thompson Tax Can Help
Thompson Tax specializes in sales and use tax consulting, and we understand the nuanced requirements businesses face when navigating exemptions like the one extended in Virginia.
We assist advertising and media businesses by:
- Reviewing transactions and vendor relationships to determine taxability and exemption eligibility,
- Developing documentation best practices to ensure compliance with state requirements,
- Training internal teams on how to manage exempt purchases and maintain proper records,
- Representing clients in audits and providing support during inquiries from tax authorities, and
- Identifying additional opportunities for tax savings across jurisdictions.
Whether you are purchasing printed materials for a multi-state campaign, reassessing vendor contracts, or conducting a compliance health check, our team is here to help you navigate the complexity of sales and use tax with confidence.
Planning for the Future
With the new expiration date set for July 1, 2028, businesses have time to incorporate the exemption into their long-term budgeting and sourcing decisions. However, tax laws are always evolving, and proactive planning is essential.
We recommend that advertising businesses operating in Virginia or sourcing from Virginia printers:
- Reassess existing contracts to ensure that exempt transactions are structured appropriately,
- Update internal tax procedures and controls, and
- Monitor future legislative updates that may affect tax policy or exemption eligibility.
Staying ahead of these changes ensures your business remains compliant while maximizing cost-efficiency.
At Thompson Tax, we support all your sales and use tax needs. With a deep understanding of multi-jurisdictional tax rules and a commitment to personalized service, our team is ready to be your trusted partner in navigating Virginia’s tax landscape and beyond. Contact us today!