Were separately stated shipping and handling charges taxable on mail-order frozen food exempt from Florida sales tax?

Plain-English summary

Shipping and handling charges on the exempt frozen food were not subject to Florida sales tax. Transportation charges were not independently taxable; they could be taxed only as part of the selling price of a taxable item. Because the food itself had a specific exemption, there was no taxable selling price to which the delivery charge could attach.

The opposite result applied to a taxable product. If the seller shipped a taxable item such as a cookbook, the associated transportation charge was part of that item's taxable sales price.

What this means for you

The underlying product controlled. Separately stating shipping did not make it taxable on exempt food, but it also did not protect shipping tied to taxable merchandise.

Common questions

Q: Were the frozen-food shipping charges taxable? No.

Q: Are transportation charges a separately taxable service? Not under the analysis in this ruling.

Q: What if the order includes a taxable cookbook? The shipping associated with that taxable item is taxable as part of its sales price.

Citations and references

• Fla. Stat. §§ 212.02(16) and 212.05 — sales price and tax on tangible property
• Fla. Stat. § 212.08(1) — food exemption
• Fla. Admin. Code r. 12A-1.045 — transportation charges
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-030

Original ruling text

SUMMARY

QUESTION: Are shipping and handling charges subject to tax
when the item sold is exempt from tax?

ANSWER - Based on Facts Below: Frozen food items, such as
those sold by your company enjoy a specific statutory
exemption; therefore, there is no taxable selling price in
which to include the transportation charges. Please be
advised that, if your company does sell taxable items, such
as cookbooks, the transportation charges associated with
that item would be subject to tax as part of the selling
price of the item.

Aug 07, 2002

Re: Technical Assistance Advisement 02A-030
Sales and Use Tax - Shipping Charges for Exempt Item
Sections: 212.02, 212.05, 212.08, F.S.
Petitioner: XXX (herein "Taxpayer")
FEI: XX

Dear :

This letter is a response to your petition dated May 10, 2002,
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, F.A.C. This response to
your request constitutes a TAA and is issued to you under the
authority of s. 213.22, F.S.

FACTS

Your letter sets forth the following facts:

[Taxpayer] sells prepackaged frozen food. Mail order
transactions are shipped from [another state] into Florida. We

do not collect sales tax on the food portion of each sale due to
the exempt nature of food in the State of Florida, but we are
currently collecting sales tax on the shipping and handling
portion of each sale.... The shipping and handling is separately
stated on the invoice or order confirmation that the customer
receives....

REQUESTED ADVISEMENT

Advice is requested on the taxability of the shipping and
handling charges.

LAW AND DISCUSSION

Section 212.05, Florida Statutes, generally imposes tax on the
sale of tangible personal property. Section 212.02(16), Florida
Statutes, defines the term "sales price" to include services
that are part of the sale of tangible personal property.
Section 212.08(1), Florida Statutes, provides a specific
exemption for food products, including the frozen foods such as
described in your petition.

Rule 12A-1.045, Florida Administrative Code, discusses
transportation charges and the application of tax to those
charges. Rule 12A-1.045(1), Florida Administrative Code, defines
the term "transportation charges" to include shipping charges,
handling charges, as well as other similar charges. According
to Rule 12A-1.045, Florida Administrative Code, transportation
charges are subject to tax as part of the taxable selling price
of the article sold when the purchaser cannot elect to avoid the
transportation charges. However, if the item sold is not
subject to tax, no tax can attach to the transportation charges,
since transportation charges are not taxable on their own. They
can only be taxable when the item sold is subject to tax.

Since frozen food items, such as those sold by your company
enjoy a specific statutory exemption, there is no taxable
selling price to include the transportation charges. Please be
advised that, if your company does sell taxable items, such as
cookbooks, the transportation charges associated with that item
would be subject to tax as part of the selling price of the

item.

CONCLUSION

Transportation charges, such as shipping and handling charges,
are not subject to tax when the item sold (frozen food) 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
850/414-9838

Control #50328