Is Freight or Shipping Taxable for Sales Tax Purposes?

“Is Freight or Shipping taxable?”

I often get asked this question by clients.  As with so many tax related questions the answer is “It depends!”

The general rule is that if shipping/freight is shown as a separate line item on the invoice, and it is optional (meaning the customer has the option of avoiding it by coming to the office to pick up the goods) then it is considered non-taxable for sales tax purposes.

Here is a good summary from the Florida Department of Revenue’s website.

Transportation service is not subject to tax when the charge is separately stated on an invoice or bill of sale and the charge can be avoided by a decision or action solely on the part of the purchaser.

Florida sales tax is imposed on the total sales price of taxable tangible personal property. “Sales price” is defined as the total amount paid for tangible personal property, including any services that are a part of the sale. Transportation is a service typically sold in conjunction with the sale of tangible personal property.

The Florida Administrative Code (Rule 12A-1.045), states:

“(1) ‘Transportation charges’ include carrying, delivery, freight, handling, pickup, shipping, and other similar charges or fees.
“(2) Transportation charges which are not separately stated on an invoice or bill of sale, but are included in the sales price of taxable tangible personal property, are subject to tax.
“(3)(a) Where the seller agrees to deliver tangible personal property to some designated place and the purchaser cannot elect to avoid the charge for transportation services, the charge for the transportation service is subject to tax, even if separately stated on an invoice or bill of sale.”

The charge can be avoided when the purchaser arranges for pick up and delivery of the goods themselves, the charge is exempt.  If a dealer does not allow the customer to pick up the merchandise, the transportation charge becomes a part of the selling price, and is subject to tax.

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