PROBLEM: Our client was uncertain if they were required to collect sales tax from their customers on the transportation charges they invoiced when products were sold and delivered to the customer. They had read conflicting information when they researched this on their own. They knew that some of their vendors did not collect sales tax when they purchased goods that were delivered to them, but they did not know why or if it was correct.
SOLUTION: We researched the state regulations on when and if transportation and delivery charges are considered part of the (gross receipts) sale subject to the tax. We provided the client with the attached document (click here) and a copy of the regulations. In this case, the client was not required to collect sales tax on the transportation and delivery charges because they offered their customers an option to pick up the product at their location or have it delivered.
RESULTS: The client no longer had to be concerned that they were not properly charging and collecting sales tax. In the event of an audit by the state department of revenue, the client would be in compliance with the law and have no negative consequences on their procedure for collecting sales tax from their customers.