Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2017

Sales and Use Tax Annotations

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557.0000 TRANSPORTATION CHARGES—Regulation 1628

Annotation 557.0091

557.0091 Delivered Price. A County Board of Education (Department) purchases textbooks directly from publishers as part of a statewide bid process administered by the California Department of Education. The publishers bid price is a unit price, which includes the cost of the textbook and what is described as the estimated cost of transportation. The books are delivered directly to the department and that is included in the bid price (without regard to the publisher's actual cost of such transportation). The publisher has represented to the Department that the stated transportation costs are not the actual costs of transportation but are only stated for the publisher's own internal accounting purposes.

In this situation, the textbooks are sold for a delivered price. Even assuming that title passes upon shipment, section 6012 provides that such transportation charges are nontaxable only if the separately stated transportation charges do not exceed the cost to the retailer of actual transportation. The publishers based their bid price upon total cost to be incurred in shipping the text books to customers in this state. They may allocate some portion of this cost to individual invoices, for internal bookkeeping purposes. In this case, the "estimated transportation" amount is includable in the measure of tax. 6/24/96.