Illinois – Proposed Amendments to Shipping and Handling Regulations

SALT Report 2337 – The Illinois Department of Revenue issued a Second Notice period for comments and suggestions regarding the proposed amendments to the state’s shipping and handling regulations. The public comment period began on March 18, 2013 and will end on May 1, 2013.

Illinois’ existing sales tax laws exclude shipping and handling from sales tax if the shipping charges are both separately contracted for and separately-stated on the customer’s invoice. Also, the law states that separately contracted delivery charges are not considered part of the product sold, and are treated as a separate non-taxable service.

However, the proposed amendments to the Retailers’ Occupation Tax regulations 130.410 and 130.415 and to the Service Occupation Tax regulation 140.301 will change. If passed as written, shipping and handling charges will be considered a part of the retailer’s cost of doing business and will be subject to sales tax.

The Department of Revenue’s website provides copies of the proposed rules which offer examples of how the new rules would affect various charges. Specifically addressed are credit card or debit card charges and fees, idle time charges assessed for cement delivery trucks, automobile dealer document fees, and fuel surcharges which will all be considered a part of the retailer’s cost of doing business and will be subject to sales tax, as will all handling charges.

The rulemaking agenda is scheduled to be heard by the Joint Committee on Administrative Rules at its April 16, 2013 meeting.

For Further Information

Illinois Department of Revenue – Proposed Rules Comments and Questions

Proposed Changes to Section 130.410 Cost of Doing Business Not Deductible

Proposed Changes to 130.415 Transportation and Delivery Charges

Proposed Changes to Section 140.301 Cost Price