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 557.0615

557.0615 Transportation Charges. The buyer's purchase order for imported steel stated, "Shipping point of origin itemized freight charges. Dock Oakland/Alameda, All Duties Paid." The seller's invoice to the buyer stated, "Including ocean freight and other charges." The ocean freight was shipped by seller from a foreign port under a bill of lading consigned to the order of seller, notice to be given to seller. The seller's customs agent handled the final release from the Alameda terminal under a customs permit. The customs agent prepared a shipping order recognizing the custom agent as the shipper and the buyer as the consignee. The purchaser picked up the goods at the dock.

Since the purchase order required shipment to Oakland/Alameda terminal, which is not owned or controlled by the retailer or its agent, shipment is not considered to have been to the seller or its agent.

In this instance, the seller had the goods shipped to its order, which means that the bill of lading in seller's hands is a document of title. That document vests the seller with the right to direct the carrier to deliver the goods to the person specified. It is not equivalent to a delivery of goods to the seller. In fact, the seller, through its customs agent, ordered the goods delivered to the buyer, and that was the only physical delivery which the carrier made. Thus, transportation charges are excludable from the measure of tax. 11/16/72.