Are delivery charges included in the base for calculating Kansas sales or compensating tax?

Plain-English summary

A seller asked whether delivery charges are included in the base used to calculate Kansas retailers' sales or compensating (use) tax.

The Department said yes. Kansas defines "delivery charges" in K.S.A. 79-3602(i) as the seller's charges for preparing and delivering property or services to a location the buyer designates — including transportation, shipping, postage, handling, crating, and packing.

The measure of the tax, "sales or selling price," is defined in K.S.A. 79-3602(ll)(1) as the total amount of consideration for which property or services are sold, with no deduction for a list of items that expressly includes delivery charges (D) and installation charges (E). Because delivery charges cannot be deducted from the selling price, the seller must include them in the amount subject to tax.

What this means for you

Retailers and sellers who deliver

Add your delivery charge to the taxable selling price and charge sales or use tax on the total. Transportation, shipping, postage, handling, crating, and packing charges are all part of "delivery charges."

Installation charges too

The same statute lists installation charges as non-deductible from the selling price, so they are also part of the taxable base.

Common questions

Q: Can I separately state the delivery charge to keep it tax-free?
A: No. K.S.A. 79-3602(ll)(1) allows no deduction from the selling price for delivery charges, so they are taxable even if separately stated.

Q: What counts as a delivery charge?
A: Under K.S.A. 79-3602(i): the seller's charges for preparation and delivery to the buyer's location, including transportation, shipping, postage, handling, crating, and packing.

Citations and references

• K.S.A. 79-3602(i) — defines "delivery charges" as the seller's charges for preparation and delivery (transportation, shipping, postage, handling, crating, packing).
• K.S.A. 79-3602(ll)(1) — defines "sales or selling price" as total consideration with no deduction for, among other things, delivery charges and installation charges; the reason delivery charges are in the taxable base.

Source

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-010

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

April 26, 2004

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RE: XXXXXXXXXXXXXXXXX

Dear XXXXX:

The purpose of this letter is to respond to your request dated March 20, 2004. In it you asked if delivery charges are included the base for the calculations of Kansas retailers’ sales or compensating taxes. The answer to question is yes.

"Delivery charges" means charges by the seller of personal property or services for preparation and delivery to a location designated by the purchaser of personal property or services including, but not limited to, transportation, shipping, postage, handling, crating and packing. See K.S.A 79-3602 (i).

"Sales or selling price" applies to the measure subject to sales tax and means the total amount of consideration, including cash, credit, property and services, for which personal property or services are sold, leased or rented, valued in money, whether received in money or otherwise, without any deduction for the following:
(A) The seller's cost of the property sold;
(B) the cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller and any other expense of the seller;
(C) charges by the seller for any services necessary to complete the sale, other than delivery and installation charges;
(D) delivery charges;
(E) installation charges; and
(F) the value of exempt personal property given to the purchaser where taxable and exempt
personal property have been bundled together and sold by the seller as a single product or piece of merchandise. See K.S.A. 79-3602 (ll) (1).

This is a private letter ruling pursuant to K.A.R. 92-19-59, based on the representations you have made. To the extent those representations are incomplete or inaccurate, this ruling is void. This ruling will be revoked by operation of law without further department action if there is a change in the controlling statutes, administrative regulations, revenue rulings or case law that materially effects this determination.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 04/30/2004 Date Modified: 04/30/2004

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