Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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G

295.0000 GROSS RECEIPTS

Annotation 295.1507

(g) SERVICE CHARGES GENERALLY

295.1507 Handling Charge. A handling charge is subject to tax when it is considered part of a taxable sale of tangible personal property, even if separately stated. If the sale is not subject to sales tax, such as a sale where all items are purchased for resale, the handling charge is likewise not subject to sales tax. If the sale is partly a taxable retail sale and partly a nontaxable sale (resale), the handling charge is prorated between the taxable part of the sale and the nontaxable part of the sale, provided that the handling charge relates to both parts of the sale.

If the handling charge relates solely to the retail sale of the property, it is fully taxable even if part of a mixed invoice. For example, the taxpayer makes a taxable sale of tangible personal property for $50 and provided a nontaxable service for $50 unrelated to the taxable sale. The taxpayer adds a $3 handling charge to the invoices which relates to the handling of the property. The taxable gross receipts would be $53 since the handling charge relates solely to the taxable sale. 9/8/94.