When were delivery charges taxable for fresh water, taxable goods, and a water-KCL mixture?

Plain-English summary

Charges to transport or deliver taxable goods were taxable unless the delivery charge was separately stated and the transportation occurred after the sale.

The letter said an October 2, 1984 amendment to Section 151.007 removed an exclusion based merely on transportation after segregation. Whether a sale had occurred instead depended on transfer of title or possession. Without contract provisions or FOB terms transferring title, the transportation charges were taxable.

Delivery charges for nontaxable items were not taxable. Fresh water was the letter's nontaxable example, but when fresh water was mixed with taxable KCL, the resulting mixture became taxable.

Common questions

Was separately stating delivery enough by itself? No. Transportation also had to occur after the sale. What showed when the sale occurred? Transfer of title or possession under specific contract provisions or FOB terms. Was hauling fresh water taxable? Not when the water was a nontaxable item; the KCL mixture received a different result.

Citations and references

• Texas Sales Tax Law § 151.007, described in the reproduced letter as amended effective October 2, 1984.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8504L0634A03

Original ruling text

April 10, 1985

Dear ***:

Thank you for your recent letter regarding the taxability of transportation
charges.

Charges for transportation or delivery of taxable goods are taxable
unless the charge is separately stated and the transportation occurs after
the sale.

Effective October 2, 1984, Section 151.007 was altered to delete the exclusion
for transportation that simply occurs after segregation. The sale then hinges
on transfer of title or possession. Therefore, baring specific contractual
provisions or FOB terms transferring title, transportation charges would be taxable.

Charges for delivery of nontaxable items are not taxable.

When a nontaxable item such as fresh water is mixed with a taxable item
such as the chemical KCL, the mixture becomes taxable.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division