New York—Sales and Use Tax: Bulletin Issued on Taxability of Shipping and Delivery Charges

The New York Department of Taxation and Finance has issued a bulletin explaining how sales and use taxes apply to 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. Shipping and delivery also include charges identified as transportation, handling, or postage.

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. 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 its 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 also not taxable. This also applies when the customer gives the seller a valid resale certificate or other exemption document.

Sales including both taxable and nontaxable charges: When taxable and nontaxable products or services are combined into a single charge on one bill, the entire bill is taxable, including any shipping or delivery charges. When charges for taxable and nontaxable products or services are listed separately on a bill, sales tax is not collected on the nontaxable charges. However, 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 fairly allocated between the taxable and nontaxable products on the bill, then only the shipping or delivery charge allocated to the taxable products on the bill 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. Any charges by the seller for shipping or delivery are included in the total amount subject to use tax.