Home               ZIP Code Lookup             Products               Support           
Views: 24378
Attachments: 0
Related Articles: 0
Feedback: 7
Helpful: 2
Not Helpful: 0
File Attachments
No attachments were found.

Which states have taxable shipping?

  • Author: Teresa
  • Create Time: 02/29/2012 13:16:00
  • Last Update Time: 07/12/2013 14:21:25

Is shipping taxable?  Just for once, wouldn't it be great if this was a "yes" or "no"?  Oct. 2011  By Jim Frazier The Sales Tax Guy

The taxability of freight or delivery charges is one of the most frequently asked questions. And the rules vary all over the place. In more than half the states, freight charges are taxable. This means that you would add the charges to the merchandise total in determining the basis for the tax calculation.

This means that, if the sale is taxable, then the freight will be taxable in those states. But if the sale is not taxable (eg. manufacturing equipment or resale), freight isn't taxable.

Here are some additional points. Remember though, that whether or not freight is taxable is only a question if the sale is taxable.

  1. If the seller is actually separately showing his inbound freight (for deliveries TO the seller), then that charge is generally included in the basis - it's taxable. For freight charges to be non-taxable, they can only be for shipments from the seller to the buyer.
  2. In states where shipping charges are NOT included in the basis, there are usually restrictions. Here's a laundry list of the possible requirements. Note that these are highly variable:
  • Is the freight charge separately stated? This is universal. For shipping charges to be non-taxable, they must be separately stated on the invoice.
  • If the sale terms are FOB origin, then the freight isn't taxable. Does the ownership transfer at the shipping point?
  • The seller can't make a profit on the delivery charge: the charge better be pretty close to what the carrier actually charged the vendor. If the seller's freight charge is more than the freight he paid, the freight charge is taxable.
  • Did the seller ship via common carrier or in his own vehicle?
  • Does the buyer have the option of arranging their own shipment or going and picking up the goods at the seller location?
  • Was the freight charge separately agreed upon? In some states, having it be on a separate line on an order form is enough. In other states, it must be a separate physical contract. In other states, it depends on the precise wording of the agreement. If there's any restriction that is a highly gray area, this is the one.
Shipping charges billed directly to the buyer by a common carrier are generally not taxable (these are "collect" charges). The buyer owes no use tax on those charges.

Please remember that this is a taxing policy that is highly variable from state to state. You need to research this carefully.

Then there are those "easy" states who just say "Is the sale taxable? Then the freight is taxable." I love those states.


Disclaimer: This is intended for education and entertainment only and is not intended as legal advice. Tax laws can vary significantly depending on the type of business, product, location, and other factors not fully explored here. Always consult a qualified attorney, CPA or tax adviser who is an expert in sales and use tax law for your area before making business decisions.


Shipping is Taxable in the following states:

AR—Arkansas

CT—Connecticut

GA—Georgia

HI—Hawaii

IN—Indiana

KS—Kanasas

KY—Kentucky

MI—Michigan

MN—Minnesota

MS—Mississippi

NC—North Carolina

ND—North Dakota

NE—Nebraska

NJ—New Jersey

NM—New Mexico

NY—New York

OH—Ohio

PA—Pennsylvania

RI—Rhode Island

SC—South Carolina

SD—South Dakota

TN—Tennessee

TX—Texas

VT—Vermont

WA—Washington

WV—West Virginia

Post Feedback
This article is:
Name: *
Email: *
Comment:
Verification Code: *
*Required Field
Related Articles
No Related Articles were found.
Feedback
7 piece(s) of feedback were found. 2 were marked helpful.
Connie Huffman   04/17/2013 10:39:20  
[Helpful]   I made a purchase from QVC and they added tax on the shipping.  The product was shipped from Maryland.  I live in Ohio.  I am very upset that I am that they are adding the tax after the shipping.  I contacted them 1-888-345-5788 and I was told that all shipping taxed no matter where you live. I don't Maryland on your list for taxable shipping.
PMB   02/25/2013 21:01:17  
[Helpful]    Very helpful!  Thanks :-)
Joyce Becvar   01/20/2013 15:19:08  
[Comment Only]   I did get a  reply in Aug 2011 from the Wisconsin Dept of Revenue for my email question that I had sent and the reply in part said if freight charges were on a separate invoice there was no tax.  I did not understand the email back then andI still don't now.  But it seems like there may be times when the freight charge may be on a separate invoice and no tax is charged.  I am not a tax expert so I don't knowt the answer. Do you? 
Joyce Becvar   01/20/2013 15:04:21  
[Comment Only]  

Why did your web site NOT say that in Wisconsin that  freight was taxable, when in Jan 2013 I found out per the Wisc Dept of Revenue agent that freight should be taxable if selling freight taxable goods to a customer in Wisconsin? 

 Is your web site not up to date?

Joyce Becvar   01/20/2013 14:57:20  
[Comment Only]  

In Jan 2013 I talked to the Wisconsin dept of Revenue and aksed if freight was taxable when taxable goods were being sent to a Wisconsin customer and both the  taxable goods and freight were shown as charges on the billing and they said that the frieght charge was taxable also.

 

Joyce Becvar   01/20/2013 14:57:19  
[Comment Only]  

In Jan 2013 I talked to the Wisconsin dept of Revenue and aksed if freight was taxable when taxable goods were being sent to a Wisconsin customer and both the  taxable goods and freight were shown as charges on the billing and they said that the frieght charge was taxable also.