New York – Taxability of Shipping and Delivery Charges

SALT Report 1530 – The New York Department of Taxation and Finance has issued a bulletin regarding the taxability of shipping and delivery charges.  Generally, charges for shipping or delivery that a seller includes on its bill are taxable if the product or service that is being shipped or delivered is taxable.
Taxable Products or Services
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. However, if a customer separately arranges and pays for delivery of a taxable item by a third party, the seller of the item will only collect sales tax on the original charge.
Nontaxable Products or Services
If the product or service being sold is not taxable, any charge to the customer for shipping or delivery is not taxable. This also applies when the customer provides the seller with a valid resale certificate or other type of exemption certificate.
Sales Including Taxable and Nontaxable Charges
When taxable and nontaxable products or services are combined on one bill sales tax must be charged in the following manner:
  • If taxable and nontaxable items are combined into a single charge on one bill then the entire bill is taxable, including any shipping or delivery charges,
  • If charges for taxable and nontaxable products or services are listed separately on a bill, sales tax is not collected on the nontaxable charges,
  • 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 divided between the taxable and nontaxable products, then only the shipping or delivery charge allocated to the taxable products is taxable
Delivery Only Services
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.
Use Tax
When a purchaser buys a taxable product or service, and the seller does not collect sales tax, the purchaser must pay use tax directly to the department and any charges for shipping or delivery are included in the amount subject to use tax.
The term “shipping and delivery” also includes charges identified as “transportation, handling, or postage.”
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