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PLNA e-News: Protecting Values In Pennsylvania

Sales Tax on Delivery Charges

Wednesday, February 26, 2014   (0 Comments)
Posted by: Gregg Robertson
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LandscapeHARRISBURG – 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.

Question:
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...

Answer

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.

Equipment Parts

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 contractor.

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.

Other Questions?

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 members only!


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