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Ezel / Tax Rulings / TX
TX 8505L0641B06 Sales and/or Use Tax (State,Local,MTA) 1985-05-03

How did Texas treat bundled and separately stated postage, handling, and insurance charges?

Short answer: A single combined postage, handling, and insurance charge was taxable. When separately identified, insurance was not taxable, handling was taxable, and postage was taxable unless the contract passed title before shipment.

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This page answers the general question as of 1985. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1985
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

If a seller made one combined charge for postage, handling, and insurance, the entire charge was taxable.

If the seller separately identified the charges on the bill, the insurance charge was not taxable and the handling charge was taxable. Postage was taxable unless contractual provisions passed title to the goods before shipment.

STAR's subject metadata mentions a damage-waiver fee, but the reproduced letter decides only postage, handling, and insurance charges. It does not provide a holding on damage-waiver fees.

Common questions

Could separately stating the charges change the result? Yes. The letter treated separately identified insurance as not taxable while handling remained taxable. When was postage not taxable? When contractual provisions passed title before shipment. What did the letter say about damage waivers? Nothing in the reproduced body, despite the broader STAR subject label.

Citations and references

The reproduced letter cites no numbered statute or rule.

Source

Original ruling text

May 3, 1985

Dear ***:

Thank you for your recent letter regarding CORP A charging tax on postage,
handling and insurance charges.

If one charge is made for postage handling and insurance, the total charge is
taxable. If these charges are separately identified on the billing, the charge
for insurance is not taxable. The charge for handling is taxable. The charge for
postage is taxable unless there are contractual provisions passing title to the
goods prior to shipment.

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

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