Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
295.0000 GROSS RECEIPTS
(g) SERVICE CHARGES GENERALLY
295.1507.150 Handling Fees and Cutting Fees. The handling fees are incoming shipping fees that a company issues on special orders. The fees are "passed on" to the customer that placed the order. The cutting fees are labor costs charged to a customer for cutting poster boards, illustration boards, or paper purchased by the customer or brought in by the customer who wants the item cut into smaller pieces.
The handling fees are merely an expense and are not deductible from gross receipts. They do not come under the transportation exclusion because that exclusion applies only to transportation costs from the retailer's place of business to the customer. The cutting fees are taxable labor sales. The cutting of the board is taxable fabrication labor on the customer's own item. The charges to the customer for such cuts constitute a "sale" subject to tax. A "sale" includes the fabrication of tangible personal property for a consideration for consumers who furnish the materials used in the fabrication. 3/12/92.