Thursday, June 07, 2012

How NYS sales tax applies to charges for shipping and delivery

When a taxable product or service is sold, any charges for shipping or delivery that the seller includes on the bill become part of the receipt subject to sales tax.

If the product or service being sold is not taxable, any charge to the customer for shipping or delivery is also not taxable. This also applies when the customer gives the seller a valid resale certificate or other exemption document.

When taxable and nontaxable products or services are combined into a single charge on one bill, the entire bill is taxable, including any shipping or delivery charges.

When charges for taxable and nontaxable products or services are listed separately on a bill, sales tax is not collected on the nontaxable charges. However:
If only one charge for shipping or delivery is listed on the bill, the entire delivery charge is treated as part of the taxable portion of the bill.
If the charge for shipping or delivery is fairly allocated between the taxable and nontaxable products of the bill, then only the shipping or delivery charge allocated to the taxable products on the bill is taxable.

Sales tax is not imposed on transportation services. Therefore, if a delivery service is sold independently from the sale of the taxable property being transported, the charge for the delivery service is not taxable. For the sale of the delivery service to be independent of the sale of the property, the customer must have arranged for the transportation and the customer must be charged for the delivery on a separate invoice.

Read some examples HERE.

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