Was federal transportation tax included in California sales price when the seller paid the carrier and title passed at destination?

Plain-English summary

The seller hired and paid a carrier to transport merchandise, and title passed to the buyer at the destination. Under those facts, the transportation charge was included in California's tax measure.

Because the federal transportation tax was imposed on the seller as the person paying for transportation, any amount charged to the buyer as reimbursement was also part of the taxable selling price.

Common questions

Was the federal transportation-tax reimbursement taxable?

Yes.

What shipping fact mattered?

Title passed to the buyer at destination.

Who paid the carrier?

The seller.

Citations and references

• December 7, 1949 memorandum concerning federal transportation tax included in lumber-dealer cartage charges — contents described; full memorandum not reproduced in the official PDF
• Unidentified federal transportation-tax authority imposing tax on the person paying for transportation and unidentified historical statutory exclusion for federal retailers' excise taxes — rules described; no titles, sections, dates, or texts supplied in the official PDF
• Lumber dealer's cartage, seller's hiring and payment of a carrier, transportation before title passage, destination title passage, federal tax collection, and buyer reimbursement — facts and assumed treatment described; underlying sale contract, invoice, freight terms, title documents, carrier agreement, carrier bill, federal-tax record, and payment records not reproduced in the official PDF
• Possible deduction decision, sales-tax return, audit, assessment, refund claim, appeal, or other outcome after the memorandum — no follow-up or final outcome supplied in the official PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/235-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/235-0080.pdf

Original ruling text

STATE OF CALIFORNIA
BOARD OF EQUALIZATION
0556 FEDERAL-TRANSPORTATION-TAX IS SUBJECT TO SALES-TAX
Saramento
March 14, 1950

235.0080

Mr. J. S. Knight (JHM cC)
E. H. Stetson
Federal transportation tax included
in disallowed cartage charges by
lumber dealers
We have noted the contents of your memorandum of December 7, 1949, concerning the question that has arisen as to whether or not to allow a deduction for Federal transportation tax where the entire cartage charge occurs before title to the merchandise passes to the buyer. Apparently the seller in this case hired a carrier to transport the merchandise. As we understand the Federal transportation tax, it is imposed upon the person paying the transportation and is collected from him by the carrier. Thus, if the seller is the person paying for the transportation, any amount added to his charge to the buyer in reimbursement of the Federal transportation tax is merely a part of the sale price as far as the purchaser is concerned, and is subject to the sales tax in the event the charge for transportation made to the buyer is itself properly included within the measure of the tax, that is, where title passes to the buyer at the point of destination. It is part of the sale price for the same reason that Federal manufacturers' excise taxes are regarded as part of the sales price and for the same reason that prior to the specific statutory exclusion Federal retailers' excise taxes were regarded as a part of the sale price subject to the sales tax. REDACTED TEXT EHS:ph