Can a retailer charge sales tax on shipping costs?
Turns out the answer to this question is a bit trickier than you might think. Before diving into the lists, there are a few things to keep in mind.
First, and what most online shoppers already know is that sales tax eligibility typically begins with the buyer’s location. This is why large retailers like Amazon can collect sales tax in one state but not in another. Conversely, Walmart must follow the sales tax laws for each state they ship to because they have physical locations in each state.
But that doesn’t mean that a seller is obligated to collect sales tax for your state. And it usually depends on whether or not you live in a state where the retailer also has a physical presence. This presence does not need to be a showcase. It can be something as mundane as a warehouse. Technically, as a consumer and taxpayer, you’re supposed to report untaxed online purchases on your income taxes each year, but the vast majority of taxpayers don’t and the IRS doesn’t enforce it. Nevertheless…
The laws relating to the relationship between sales tax and sales tax are complex and constantly evolving. The days of tax-free online shopping are numbered as state sales tax laws slowly catch up with the Internet revolution. States know they are losing a fortune in tax revenue to online sales, and they are scrambling to plug the holes. Well, as much as molasses slow government agencies can scramble, anyway.
So how does Brad’s Deals handle sales tax? When our team of online shopping experts post an offer, we always make an effort to report shipping charges and let you know if sales tax is likely to be charged on your purchase. However, we’re not talking about specific tax rates, including whether or not your state will charge you sales tax specifically on shipping, as they vary wildly by state, county, and city. to the next, not to mention the different tax rates for different products, and the eagerness with which they can change.
Our best advice here is to be a smart online shopper:
- Look for stores that offer free shipping.
- Consolidate your purchases to exceed free shipping spending thresholds.
- Opt for store pickup to completely avoid shipping charges when you can.
- Know your local tax rates.
- Finally, check out our list below to see if shipping is included in the calculation when shopping online.
States where the shipment is taxable:
- District of Colombia
- New Jersey
- New Mexico
- new York
- North Carolina
- North Dakota
- Caroline from the south
- South Dakota
- West Virginia
States where the shipment is not taxable if shown separately:
What exactly does “declared separately” mean? The short answer is, if shipping is listed as a separate item on your invoice, it cannot be taxed. Well, most of the time. There are also exceptions here, of course, as the sales tax laws are tricky.
- Rhode Island
It is complicated:
Shipping cannot be taxed if it is shown separately on an invoice or invoice, or if the charge can be avoided by a decision or action taken by the buyer. This means that online purchases eligible for in-store pickup should be exempt from sales tax levied on shipping, as you can avoid shipping that way.
Talk about complicated … the taxation of shipping in Illinois is highly dependent on factors that you as a consumer are unlikely to be aware of. For example, if a retailer charges a flat shipping cost of $ 7.99, but their actual shipping cost for your order is less than that, say $ 5.50, then the shipping cost is taxable. Which, let’s face it, is a pretty crude deal for us as consumers, because not only are you charged more than the actual cost of shipping, but you are also taxed on that extra cost on top of that.
Also, just because shipping is a separate line on your invoice doesn’t mean it’s not an inseparable part of the cost of the item. If shipping it is the only way you can get it, Illinois considers shipping charges to be part of the sale price, regardless of how the invoice is broken down.
Finally, some believe that sellers may not have to charge sales tax if they offer an in-store pickup option, but that’s really not clear at all. Let’s just say “maybe, or maybe not” for now, because Illinois still has a long way to go to clarify this.
Shipping is not taxable if shown separately, but handling is taxable. So when you have a combined shipping and handling charge, the shipping becomes taxable.
As in Maryland, shipping charges are not taxable if handling is listed separately, but are taxable if combined.
In general, shipping is not taxable if shown separately from the price of the item. However, if you combine it with a processing fee, it becomes taxable. Many Virginia retailers circumvent the tax by listing shipping and handling charges as separate items.
Yes, this only covers 45 states, so here are the other 5:
Montana, New Hampshire, Delaware, Oregon, and Alaska aren’t listed anywhere above, as the lucky residents of those five states never have to face sales tax anyway. the state. makes it pleasantly simple for retailers.
This article first appeared in Brad’s Deals.