The place to find business sales tax information

— as well as solutions, services and jobs!

We sell products to distributors in multi- states.What about tax on shipping charges?

Full Question: We are direct selling company shipping products from the state of Idaho to independent distributors in various states. Are we required to collect and remit sales tax on shipping charges?

Brought to you by:

NOTE: This site does NOT provide client-specific tax advice. Information provided is general and may NOT apply to your particular situation. Do NOT take any action based upon any site content until you have received advice from an independent, qualified tax practitioner with whom you have a professional-client relationship. All content is subject to our disclaimer.


Diane Yetter photoIf you are registered to collect sales tax in all the states where you have independent distributors, then you would have to determine the nature of your freight charges to determine whether they are taxable. The first test is whether the projects you are selling are taxable. If they are not, then the freight charges are not taxable. If the products are taxable, then you have to determine if the shipping charges are really just "shipping" charges or are they "shipping and handling charges". Shipping charges are generally defined by the states as being the direct shipping charges and do not include any additional costs that represent handling and preparing the item being shipped. If your charges exceed the actual shipping charges, they likely are classified as shipping and handling. Virtually every state taxes shipping and handling charges. If your charges are just shipping, then the next test is whether the shipping charges are optional and if the customer has the option to either select shipping or pickup or if they have the option to select the method of shipping. If the customer has no option, then most states will again tax the shipping charge as it is considered part of the selling price. If your shipping charges are actual and optional, then you must determine if the delivery is via common carrier or your own truck. If it is in your own vehicles, then most states tax the delivery charge. Finally, the last test is to determine if the shipping terms are FOB Origin or Destination. More states tax FOB Destination as it is part of the selling price however, the states do vary more on this point. The taxability of shipping is unfortunately not very simple and does vary by state.

(Not quite what you need? View SALES TAX QUESTIONS home page to access other topics or use site-wide SEARCH in upper right)


Access to any portion of is contingent upon your acceptance of our Terms of Use. This Web Site and content provided by STS Publishing, LLC and its third party content providers, including, but not limited to information, documents, forms, comments, advice and opinions, is for informational purposes only, and is not a substitute for professional advice, nor does the use of this Web Site constitute a professional-client relationship. The Web-Site also includes advertisements, directory listings, job postings and links to third party web sites, all of which are provided for your convenience only and in no way constitute a referral, endorsement, or warranty by of any product or service provided by such third parties. All content is provided “as is” with no guarantee regarding accuracy, suitability, or timeliness. Your reliance on any content accessed on or through the Web Site, or on any product or service provider is strictly at your own risk.