Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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557.0000 TRANSPORTATION CHARGES—Regulation 1628

Annotation 557.0009

557.0009 Agent for Customer. A trucking firm does not hold a seller's permit. The firm has arrangements with contractors who place orders for dirt, sand, gravel, and related materials with the firm by phone. The firm then orders the materials from a specific supplier for delivery to the contractors. The firm renders a billing to each customer in the name of the firm and without reference to any agency. Materials are purchased "tax paid" and billed to customers at the same price as purchased from the vendor plus transportation charges which are mostly done by the firm's own trucks.

A weight slip is signed by a representative of the contractor at the time of delivery of the materials and a copy of this weight slip is returned to supplier. The supplier then issues a preliminary Notice of Lien to the customer.

Based on this scenario, the materials are being ordered by the trucking firm as agent for the contractor. The material supplier regards the transaction as an agency transaction as evidenced by its issuance of a preliminary Notice of Lien to the contractor for each transaction. If the sale by the supplier were made to the trucking firm, as principal, for resale and not on behalf of a contractor, the actual perfection of a lien against the customer would be unlawful. The contractor believes the arrangement amounts to an agreement to purchase as agent since many of the contractors have executed written agency agreements with the trucking firm. Therefore, the separately stated transportation charges are not includable as taxable gross receipts because the transportation services are not performed by facilities of the retailer, supplier, and are derived from delivered price transactions. (Regulation 1628(a) and (e).) 6/7/94.