Transportation or delivery charges

# A.

Generally. The tax does not apply to transportation or delivery charges added to a taxable sale provided such transportation charges are separately stated on the invoice to the customer. If the transportation or delivery charges are not separately stated on the invoice, they will become part of the sales price of the property and will be subject to the tax.

Where the use tax is applicable, separately stated transportation charges are also excludable in the computation of cost price.

# B.

"Transportation" and "delivery charges," defined. As used in this section the terms "transportation" and "delivery charges" mean charges for delivery from the seller to the purchaser, commonly known as "transportation-out," and include postage or common carrier charges. Transportation and delivery charges do not include charges from a manufacturer to a retailer's place of business relative to purchases for resale, nor do they include handling charges.

The following example illustrate the application of the tax to transportation and delivery charges.

Example 1: Company A orders furniture from a manufacturer for Purchaser B. The furniture is delivered to A's place of business by the manufacturer who separately states the transportation charges. Because the furniture is for resale, no tax is applicable to any portion of the charge from the manufacturer to A. A then delivers the furniture to B's home and separately states the charges for delivery from the store to B. These charges do qualify as "transportation-out" and are not subject to the tax. However, the charges from the manufacturer to A represent "transportation-in" to the seller, are a part of the cost of the furniture, and are included in the sales price of the furniture subject to the tax, even if separately stated on the invoice to the customer.

Example 2: Purchaser P places an order for an auto part through Dealer D. D orders the part from manufacturer M who ships the item directly to P and bills D for the cost of the part plus separately stated transportation charges. D in turn bills P for the part and separately states the transportation charges from M. Providing that D does not mark-up the transportation charges, the tax will not apply to the charges.

For "sales price," see 23VAC10-210-4000.