Missouri –Sales Tax And Mandatory Shipping Charges

SALT Report 3305 –  In Letter Ruling 7362 (2/24/14), the Missouri Department of Revenue ruled that separately stated shipping charges that were mandatory were subject to sales tax regardless of whether they were through a common carrier, drop shipment or through taxpayer’s own vehicles.  The application of sales tax to separately stated shipping charges is determined by several factors determining both parties intent including :

  1. When title passes from the seller to the buyer;
  2. Whether the delivery charge is separately stated;
  3. Who controls the cost of the means of delivery;
  4. Who assumes the risk of loss during delivery; and
  5. Whether the seller derives financial benefit from delivery.”

The Taxpayer/Vendor in this case intended to make a profit from delivery charges.  This meant the taxpayer intended for delivery to be “part of the sale…which meant that title and risk of loss do not pass from applicant to customer until delivery.”  Because delivery is part of the sale, the Department requires vendor to collect and remit tax.

For Further Information:

Letter Ruling 7362 (2/24/14)