Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
557.0000 TRANSPORTATION CHARGES—Regulation 1628
557.0115 Delivery of Goods by More than One Carrier. Taxpayer, an interior design firm, is in the business of selling custom furniture which it contracts with third parties to manufacture and ship. All furniture is delivered via common carrier to a local common carrier who then delivers the furniture to the taxpayer's customer. The carrier picking up at the point of origin will deliver only to a receiver/carrier. Thereafter, a local carrier is needed to complete the delivery. The furnishings never come to the taxpayer's office as it is a design studio only. The actual freight costs are billed to the customer.
The application of the tax depends on to whom the manufacturer delivers the furniture. If the manufacturer ships the furniture by common carrier to the taxpayer in care of a local common carrier and the taxpayer then directs the local common carrier to deliver the furniture to the purchaser, then any separately stated charges for transportation from the manufacturer to the taxpayer in care of the local common carrier are included in the measure of tax. That shipment is not "directly to the customer." Only the separately stated charges for transportation of the property from the local common carrier from which shipment is made directly to the purchaser are not taxable.
On the other hand, if the manufacturer ships the furniture by common carrier to the purchaser in care of the local common carrier and the local common carrier then delivers the furniture to the purchaser, the property is considered as being delivered "directly to the purchaser," notwithstanding the fact that more than one carrier may be used to complete the delivery to the purchaser. In such case, tax does not apply to the separately-stated transportation charges. 2/28/97.