Maryland: Separately reported shipping or delivery charges are not taxable. However, shipping costs included in the assessed price are generally taxable, as are handling charges and combined shipping and handling charges. Unfortunately, the merchant doesn`t charge VAT on shipping costs just to get more money from you. After all, sales tax is a transfer tax, so they can`t keep the money anyway! Some states are actually considering shipping and processing a portion of the taxable price of an item. In their thinking, if you bought it online, you have to get it shipped, which means shipping is part of the price. New Mexico: Gross income tax generally applies to shipping and shipping costs (including shipping and freight) within New Mexico, whether listed separately or included in the selling price. What exactly does “separately declared” mean? The short answer is that if the shipment is listed as a separate item on your invoice, it can`t be taxed. Well, most of the time. Of course, there are exceptions here too, as VAT link laws are tricky. West Virginia: Generally, shipping and handling charges are considered part of the selling price in West Virginia. In the case of taxable sales, the fees are usually taxable; In the case of tax-exempt sales, they are generally exempt. This applies to shipping charges included and separately, unless the delivery service is provided by a joint carrier regulated by the Public Service Commission and the customer pays the joint carrier directly (not the retailer). West Virginia – West Virginia considers all costs associated with the delivery of an item as part of the total purchase price, so these shipping and handling charges are subject to sales tax.
Make sure your invoices and receipts use specific terms to describe shipping costs. If you charge shipping costs that may not be taxable, use terms such as shipping, delivery, freight, or postage. If you charge a taxable fee for processing, be sure to use this term on your bill. This will help you determine how you collect taxes and make things clearer for your customers. It will also make it easier for everyone when we check your records. You must charge sales tax on shipping costs if you make a sale to a buyer in one of your nexus states if that state`s tax laws declare the shipping costs taxable. Washington, D.C.: Shipping and handling charges are generally taxable in the District of Columbia. According to the Office of Tax and Revenue, sales tax applies to “charges for any shipment where pickup and delivery is made in the district for which separate charges are charged, except for goods delivered for resale and for which a certificate of resale from the District of Columbia (Form OTR-368) has been issued.” A customer buys smoked meat, various cheeses and jellies from a mail-order grocer. The grocer adds shipping and handling charges to the customer`s invoice. Since all products purchased by the customer are non-taxable food, all charges, including shipping and handling, are exempt from tax. Example: A wholesaler delivers a warehouse delivery to a customer who operates in the retail trade.
The customer must provide the wholesaler with a resale certificate at the time of ordering. The transport costs charged by the wholesaler for the delivery of this order are not taxable. One of the things that has popped up in our blog comments is whether it`s “legal” for a business to charge sales tax on shipping and handling. If your business doesn`t charge proper sales tax on shipping and handling, you may be violating state and local sales tax laws. Many states have specific rules on how the buyer is charged, such as whether handling and shipping — or related terms such as “delivery,” “freight,” or “postage” — are included in the total cost, or whether they are broken down together or separately. More importantly, your customer`s location can be much more important than yours. Some general rules for shipping costs included: Since shipping is taxable, Theo would charge the 6% sales tax rate on the total transaction amount of $110. Utah: Delivery charges (including, but not limited to, transportation, shipping, postage, handling, crates, or packaging) for taxable and exempt sales of tangible personal property, electronically transmitted goods, or services in the state are generally exempt when disclosed separately. Shipping charges for taxable goods may be taxable if they are part of the selling price (or “freight”). Nebraska: Shipping and handling charges are generally taxable in Nebraska if the sale is taxable and the fees are paid to the retailer. They are generally exempt if the sale is exempt. If there is a one-time delivery charge for a supply of exempt and taxable goods, the tax should be apportioned.
Delivery, freight, postage, shipping or transportation charges paid to someone other than the retailer are generally exempt. Oklahoma – Oklahoma does not consider shipping and handling charges taxable as long as they are listed separately on the invoice. Check the state`s tax laws to determine if and under what circumstances sales taxes should be levied on shipping and handling charges. Differences arise depending on whether these charges are listed separately or whether you use a common carrier or deliver yourself. Many states exempt some products, typically gift cards and vouchers, as well as some, but not all, foods. In addition, tax fees cannot be claimed from certain exempt organizations. Maryland: Delivery charges included in the taxable price are generally taxable in Maryland, while separately reported delivery charges are not taxable. However, the processing fee cannot be shown separately, so if the sale is taxable, the processing fee is taxable. If shipping and handling charges are combined, the shipping charges lose their exemption and the entire charge is taxable. South Carolina: Generally, delivery charges for tangible personal property are part of the tax base (i.e., taxable) when a retailer charges a customer for delivery of tangible personal goods in its own trucks and the retailer charges a customer for delivery through a joint carrier and the shipping terms are F.O.B. Destination.
However, if the delivery is made by an ordinary carrier and the conditions are F.O.B. Shipping Point, the shipping costs are not considered part of the taxable amount and are exempt. If the shipping conditions are not specified, the shipping costs are considered part of the taxable amount and are taxable, but the seller cannot deduct the corresponding shipping costs. Finally, selling expenses that are exempt from shipping tax are generally exempt. California – As long as they are listed separately on the invoice and are not higher than the actual shipping costs, California shipping costs are not subject to sales tax. The delivery must also be made by a common carrier, and handling charges are taxable, so they must also be listed separately. Most states (Arkansas, Connecticut, Georgia, Illinois, Kansas, Kentucky, Michigan, Mississippi, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, and Wisconsin) require sales tax to be calculated on the cost of goods plus shipping costs. In other words, your bill to customers in those states should be broken down and sales tax should be calculated from the total. In the U.S., this can be difficult, as some U.S. states require retailers to charge sales tax on shipping costs, while others don`t.
Nebraska – “Delivery, freight, postage, shipping, handling and other service charges” are taxable in Nebraska. An exception is U.S. Postal Service delivery charges if these charges are listed separately on the invoice. This bulletin explains how sales and use taxes apply to shipping and shipping charges. Generally, shipping or delivery charges that a vendor claims on their invoice are taxable if the goods or services shipped or delivered are taxable. Shipping and delivery conditions also include charges identified by terms such as transportation, handling or postage. Other states consider the shipping costs to be higher than the actual cost of shipping the item to be taxable. Let`s say you sell a book on eBay and charge your customer $5.00 for shipping, but shipping the book only costs you $3.00. This $2.00 surcharge would be taxable.