Sales Tax on Delivery Charges
Wednesday, February 26, 2014
Posted by: Gregg Robertson
HARRISBURG – PLNA received a question recently on our website
from a member on when sales taxes
are due on delivery charges. We responded directly to the member, but thought the
question and answer would benefit others.
What is the PA state tax rule when
charging sales tax to shipping fees from a vendor? Example: If I order a part
to repair landscape equipment and it needs to be shipped in, I, the customer,
will be charged a shipping fee. Is that shipping fee taxable? Another example:
If I order plant material and there is a delivery fee, is the delivery fee
taxable? Please advise...
Unlike most sales tax
questions in Pennsylvania, this one is fairly straight forward. If a good is subject
to sales tax, then any delivery charges are also subject to sales tax. If a good
is not subject to sales tax, then the delivery charges are not taxable.
But the trick here is knowing if the good being shipped is
taxable or not.
In the case of a landscape contractor ordering a part for
any equipment, that part, and consequently its shipping charges, will be subject
to state sales tax that the landscape contractor must pay. If the part is shipped
from out of state and no sales tax is charged by the vendor, the landscape contractor
must then calculate the use tax on the part and shipping, which is the same
rate as the sales tax, and remit it to the state.
Plants: Used on a Job
or for Resale as Plants?
The case of the plants is a bit more complicated. In the
case of landscape contractors, the plants and their shipping charges will
almost always be subject to sales and use tax which must be paid by the landscape
However, if the plants are bought to be resold as plants (not
as a part of a job), then they are not subject to sales and use tax to the purchaser
(nor are the shipping charges). So if you sell the plants at retail or at
rewholesale, the plants and their shipping charges are not taxable to you, but
you must collect the sales tax from the purchaser at the time of sale and remit
it to the state.
In this latter case, if you have both a landscape contracting
operation and a retail garden center or rewholesale yard, you must keep careful
records of plants or other materials (for example mulch, pavers, etc.) purchased
for resale vs. those that are used on a job because the sales tax treatment is
very different. If you don’t keep careful records and are audited, the auditor may
consider all items and shipping charges taxable. You could find yourself with
an unexpected large sales and use tax bill with penalties.
For More Information
For more information, click here see the section of the
Pennsylvania Code that applies.
If you have questions about this issue or others dealing
with the government, email or call Gregg
Robertson at PLNA (800.898.3411 x101). This is a free member benefit for PLNA