Are delivery charges taxable?
Any charges for freight, transportation or delivery in connection with the sale of tangible personal property that are separately stated on a customer invoice are NOT taxable pursuant to AB403. (Effective 05/22/09) If they are not separately stated they are taxable. Handling, packaging, and crating are still taxable even if separately stated. Prior to 05/22/09 charges for freight, transportation or delivery in connection with the sale of tangible personal property was taxable.
Delivery charges in and by themselves are classified as a service and ordinarily would not be subject to a sales tax. However, there are instances where delivery charges are an inseparable part of the transaction and consequently would be includable in the taxable base. A simple rule of thumb has been the use of certain terminology such as FOB origin and FOB destination. FOB origin transactions tend to reflect that delivery charges are not part of the sale although the vendor may as a customary service to their clients make the arrangements predicated on information given them by their customer. In these transactions any separately stated delivery charges would not be includable in the taxable base since the dealer is not responsible for delivering articles purchased to the customer. On the other hand, when the vendor has an obligation to deliver items purchased from them, more than likely any stated charges for delivery would be includable in the taxable base.
