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 557.0025

557.0025 Asphalt Paving Materials—Passage of Title. A taxpayer sells asphalt products and mixtures, mineral aggregates, and rip rap, "FOB Plant + tax." In the past, the taxpayer had delivered materials at its plant to its customer's trucks or had provided for outside carriers if the customer did not furnish the trucks. When outside carriers were used, transportation charges were separately stated in the taxpayer's sales invoices. The taxpayer then acquired trucks of its own and, in some cases, began making deliveries itself. The taxpayer did not alter its pricing and billing practices. Transportation charges continued to be separately stated to customers on invoices with the following statement:

"We make deliveries inside the curb line and on the lot at customer's risk only and accept no responsibility whatsoever for damages resulting upon such deliveries. Title passes to buyer upon delivery of goods to the carrier."

The taxpayer has been using the same invoices regardless of whether delivery is made by outside carrier or by its own trucks. It seems appropriate to find that, as a course of dealing between seller and individual buyers, they have explicitly agreed that title to goods passed at the seller's plant. (Commercial Code section 1205.) This agreement may be found in interpreting the word "carrier" as used on taxpayer's invoice to include taxpayer's own carriage facilities. Thus, in this case, the transportation charges involving carriage by the taxpayer's facilities are excludable from the measure of tax. 7/20/72.