Was a separately stated furniture delivery charge taxable when customers could avoid it by picking up their purchases?

Plain-English summary

Florida found the retailer's optional, separately stated furniture delivery charge was not subject to sales tax. Customers could either pick up their purchases at a retail store or distribution facility at no charge, or choose delivery to a location such as their home and pay a separate delivery fee.

The submitted invoices illustrated both choices: one customer paid a separately listed $49.99 delivery charge, while another picked up the furniture and paid no delivery amount.

Two conditions excluded the fee

Rule 12A-1.045 treated transportation charges as nontaxable when:

1. The charge was separately stated on the invoice or bill of sale.
2. The customer could avoid it through the customer's own decision or action.

Both conditions were present. The delivery charge was therefore excluded from the taxable sales price of the furniture.

The Department cited Department of Revenue v. B & L Concepts, Inc., which likewise held that an optional, separately stated delivery charge incidental to a tangible-personal-property sale was not part of the taxable sales price.

What this means for you

Furniture and home-goods retailers

Give customers a genuine pickup option and show delivery as its own invoice line. The records should make clear that the customer, not the seller, controls whether the fee is incurred.

Businesses charging for transportation

Separate statement alone is not enough if delivery is mandatory. Customer choice alone is not enough if the fee is hidden inside the product price or bundled with other services.

Accountants and tax professionals

Distinguish delivery-only fees from delivery-and-installation packages. Installation can be taxable even when optional, which can make a combined charge taxable.

Common questions

Q: Could the customer avoid the delivery charge?
A: Yes, by picking up the furniture at the retailer or distribution facility.

Q: Was the fee separately shown?
A: Yes. The delivery invoice listed a separate $49.99 charge.

Q: Was the furniture itself taxable?
A: The ruling addressed excluding the delivery fee from the taxable sales price; it did not exempt the furniture sale.

Q: Would the answer be the same if setup or installation were bundled in?
A: This ruling did not cover that package. Florida separately treats installation as taxable, so bundling can change the result.

Citations and references

• Fla. Stat. § 212.02(16) — sales price includes services that are part of a sale
• Fla. Stat. § 212.05 — sales tax on tangible personal property
• Fla. Admin. Code r. 12A-1.045 — transportation charges and the separate-statement/customer-choice test
• Department of Revenue v. B & L Concepts, Inc., 612 So. 2d 720 (Fla. 5th DCA 1993) — optional, separately stated delivery fee

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-052

Original ruling text

SUMMARY
QUESTION: Is a separately stated delivery fee that is imposed only at the option of the purchaser properly included in
the taxable sales price of the item sold?
ANSWER - Based on Facts Below: No. Taxpayer's delivery charge is separately stated, and it is imposed only at the
customer's option when the customer chooses to have Taxpayer deliver the furniture. Therefore, it should be excluded
from the taxable sales price of the furniture, and it is not subject to tax.
August 25, 2004
Re: Technical Assistance Advisement 04A-052
Sales and Use Tax - Delivery Charges
Sections: 212.02, 212.05, F.S.
Rule: 12A-1.045, F.A.C.
Petitioner: XXX (herein "Taxpayer")
FEI: XX
Dear :
This letter is a response to your petition dated July 29, 2004, for the Department's issuance of a Technical Assistance
Advisement ("TAA") concerning the above referenced party and matter. Your petition has been carefully examined
and the Department finds it to be in compliance with the requisite criteria set forth in Chapter 12-11, Florida
Administrative Code. This response to your request constitutes a TAA and is issued to you under the authority of s.
213.22, Florida Statutes.
FACTS
The petition sets forth the following facts:
The taxpayer owns and operates retail furniture stores principally [in] Florida....
When a customer purchases furniture, they are given the choice of picking it up at the retail location or at the
taxpayer’s distribution facility or having the furniture delivered to a location of their choice, typically their home. If the
customer chooses to have the furniture delivered, the taxpayer charges a separately stated delivery charge. Exhibit I
includes two actual invoices[:] one in which the furniture was delivered at a charge of $49.99 and a second in which
the customer picked up the furniture [with] no charge [for delivery]....
REQUESTED ADVISEMENT
Advice is requested on the taxability of the delivery charge.

LAW AND DISCUSSION
Section 212.05, Florida Statutes, generally imposes tax on the sale of tangible personal property. The tax is based on
the sales price of the tangible personal property sold. The term "sales price" is defined in Section 212.02(16), Florida
Statutes, to mean in pertinent part "the total amount paid for tangible personal property, including any services that
are a part of the sale."
Rule 12A-1.045, Florida Administrative Code, discusses the sales tax as it relates to transportation charges, and it
states in pertinent part as follows:
(1) "Transportation charges" include carrying, delivery, freight, handling, pickup, shipping, and other similar charges or
fees.
(2) Transportation charges which are not separately stated on an invoice or bill of sale, but are included in the sales
price of taxable tangible personal property, are subject to tax.
(3)(a) Where the seller agrees to deliver tangible personal property to some designated place and the purchaser
cannot elect to avoid the charge for transportation services, the charge for the transportation service is subject to tax,
even if separately stated on an invoice or bill of sale.

(4)(a) The charge for transportation services is not subject to tax when both of the following conditions have been met:

1. The charge is separately stated on an invoice or bill of sale; and
2. The charge can be avoided by a decision or action solely on the part of the purchaser.... (Emphasis Supplied)
   The court held, in Department of Revenue v. B & L Concepts, Inc., 612 So.2d 720 (Fla. 5DCA 1993), that separately
   stated delivery charges that are imposed only at the option of the purchaser, and that are incidental to the sale of
   tangible personal property, are not properly includable in the taxable sales price of tangible personal property sold.
   Rule 12A-1.045, Florida Administrative Code, is consistent with the findings of the court.
   Taxpayer's delivery charge is only imposed at the option of the customer. The customer may elect to have Taxpayer
   deliver the furniture for a separately stated charge, or the customer may elect to pick up the furniture itself and avoid
   the delivery charge. Separately stated delivery charges that are imposed only at the option of the customer meet the
   requirements set by Rule 12A-1.045, Florida Administrative Code, to be excluded from the taxable sales price of the
   tangible personal property, and they are not subject to tax.
   CONCLUSION
   Taxpayer's delivery charge is separately stated, and it is imposed only at the customer's option when the customer
   chooses to have Taxpayer deliver the furniture. Therefore, it should be excluded from the taxable sales price of the
   furniture, and it is not subject to tax.

This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which is binding on the
department only under the facts and circumstances described in the request for this advice, as specified in Section
213.22, F.S. Our response is predicated upon those facts and the specific situation summarized above. You are
advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules
upon which this advice is based may subject similar future transactions to a different treatment from that which is
expressed in this response.
You are further advised that this response, your request and related backup documents are public records under
Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s. 213.22, F.S. Confidential
information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the
undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this
response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your
response should be received by the Department within 15 days of the date of this letter.
Sincerely,
Sara D. Faulkenberry
Tax Law Specialist
Technical Assistance and Dispute Resolution
Control #61067