Were a furniture retailer's separately stated delivery charges subject to Florida sales tax when customers could avoid delivery?

Subject

Transportation Charges

Plain-English summary

The furniture retailer's delivery charge was not subject to Florida sales tax because it was separately stated and avoidable solely by the customer. At the time of purchase, a customer could take the furniture, arrange pickup through another transportation company, or pay the retailer a reasonable charge to deliver it with the retailer's own equipment and staff.

Customers who handled pickup themselves paid no added charge. Customers who chose retailer delivery saw that charge separately on the invoice. Those facts satisfied the two conditions in the transportation rule: separate statement and purchaser-controlled avoidability.

The invoice did not itself say that delivery was optional. Florida still accepted the described practice but emphasized that the retailer bore the burden of proving customers could actually avoid the charge.

What this means for you

A separate freight line is only half the test. The buyer must also have a real, unilateral way to avoid the seller's transportation charge, such as self-pickup or hiring another carrier.

Retailers should preserve evidence of that choice in customer-facing terms, order records, pickup procedures, or similar documentation. The ruling did not prescribe one required proof format, but placed the burden on the seller.

Common questions

Q: Was retailer delivery mandatory? No. Customers could pick up the furniture or hire another transportation company.

Q: Was the delivery charge separately stated? Yes, when a customer selected retailer delivery.

Q: Did the invoice have to say delivery was optional? The reviewed invoice did not. The ruling still found the charge nontaxable on the stated facts but warned that the retailer had to prove avoidability.

Q: Would a mandatory delivery charge receive the same result? No. The cited rule treated seller-required transportation as taxable even when separately stated.

Citations and references

• Fla. Stat. § 212.02(16) — sales price includes services that are part of the sale
• Fla. Stat. § 212.05 — Florida sales and use tax
• Fla. Admin. Code r. 12A-1.045 — transportation charges and the separately stated, purchaser-avoidable test
• Florida Hi-Lift v. Department of Revenue, 571 So. 2d 1364 (Fla. 1st DCA 1991)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-035

Original ruling text

SUMMARY

In this case, the taxpayer (Retailer) is engaged in the
business of selling furniture as a retail dealer. In order
to accommodate its customer, Retailer offers a delivery
service to customers who desire this service. The service
is provided at the customer's option for a reasonable rate.
Retailer uses its own means of transportation and manpower
to handle and deliver the furniture to the customer's
desired location. If the customer does not desire the
transportation services offered by Retailer, the customer
can arrange to pick up the furniture, or contract with
another transportation company to have the furniture picked
up and delivered to the desired location. It is completely
the choice of the customer how they want to get their
purchase from the retail location to their destination.

At the time of purchase, the customer informs Retailer
whether they will arrange for pick and delivery themselves,
or whether Retailer will have to deliver the furniture. If
the customer arranges for the pick up and delivery
themselves, there are no additional charges added to the
sales price of the furniture. If the customer chooses to
have Retailer deliver the furniture, the charge for
delivery is separately stated on the customer's invoice.
In these cases, the item(s) is picked up from the warehouse
or the showroom floor, and delivered according to the
instructions given on the invoice. Even though the charge
for delivery is separately stated on the invoice, there is
no statement on the invoice to indicate that the customer
has the option of using Retailer to deliver the furniture.

In light of Rule 12A-1.045, F.A.C., which provides that
transportation charges are not a part of the sales price,
and as such, not subject to tax when (1) the transportation
charges are separately stated on an invoice or bill of
sale, and (2) the transportation charges can be avoided by
a decision or action solely on the part of the purchaser,
Retailer's transportation charges would not be subject to
tax. Here we agree that delivery charges are separately
stated and maybe avoidable by the customer. However,

Retailer has the burden of proving that the customer can
avoid the charge for delivery.

May 08, 1998

Re: Technical Assistance Advisement 98A-035
XXX ("Retailer")
Sales and Use Tax - Transportation Charges
Section: 212.05; and 212.02(16), F.S.
Rule:

12A-1.0045, F.A.C.

Dear :

Your letter of February 18, 1998, requested a Technical
Assistance Advisement on the application of the Sales and Use
Tax to the above referenced matter. This response to your
request constitutes a Technical Assistance Advisement under
Chapter 12-11, Florida Administrative Code, and is issued to you
under the authority of s. 213.22, Florida Statutes.

DISCUSSION OF FACTS

Retailer is engaged in the business of selling furniture as
a retail dealer. In order to accommodate its customer, Retailer
offers a delivery service to customers who desire this service.
The service is provided at the customer's option for a
reasonable rate. Retailer uses its own means of transportation
and manpower to handle and deliver the furniture to the
customer's desired location.

The customer may not desire the transportation services
offered by Retailer. In these cases, the customer arranges to
pick up the furniture, or contracts with another transportation
company to have the furniture picked up and delivered to the
desired location. It is completely the choice of the customer
how they want to get their purchase from the retail location to
their destination.

At the time of purchase, the customer informs Retailer
whether they will arrange for pick up and delivery themselves,
or whether Retailer will have to deliver the furniture. If the
customer arranges for the pick up and delivery themselves, there
are no additional charges added to the sales price of the
furniture. If the customer chooses to have Retailer deliver the
furniture, the charge for delivery is separately stated on the
customer's invoice. In these cases, the item(s) is picked up
from the warehouse or the showroom floor, and delivered
according to the instructions given on the invoice.

Even though the charge for delivery is separately stated on
the invoice, there is no statement on the invoice to indicate
that the customer has the option of using Retailer to deliver
the furniture.

REQUESTED ADVISEMENT

You question whether sales tax should be charged and
collected on the charge for delivery.

DISCUSSION and ANALYSIS OF LAW

The following statutory and administrative cites, and case
law, are relevant to addressing the issue under advisement
herein:

Section 212.05, F.S, provides in part:

It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who engages
in the business of selling tangible personal property at
retail in this state, including the business of making mail
order sales, or who rents or furnishes any of the things or
services taxable under this chapter, or who stores for use
or consumption in this state any item or article of
tangible personal property as defined herein and who leases
or rents such property within the state.
(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:

(a)1.a. At the rate of 6 percent of the sales price of each
item or article of tangible personal property when sold at
retail in this state....

Section 212.02(16), F.S., defines "Sales price" as:

(16) "Sales price" means the total amount paid for tangible
personal property, including any services that are a part
of the sale....

Rule 12A-1.045, F.A.C., provides in part:

(1) "Transportation charges" include carrying, delivery,
freight, handling, pickup, shipping, and other similar
charges or fees.
(2) Transportation charges which are not separately stated
on an invoice or bill of sale but are included in the sales
price of taxable tangible personal property are subject to
tax.
(3)(a) Where the seller agrees to deliver tangible personal
property to some designated place and the purchaser can not
elect to avoid the charge for transportation services, the
charge for the transportation service is subject to tax,
even if separately stated on an invoice or bill of sale.
...
(4)(a) The charge for transportation services is not
subject to tax when both of the following conditions have
been met:

1. The charge is separately stated on an invoice or bill of
   sale; and
2. The charge can be avoided by a decision or action solely
   on the part of the purchaser....

Rule 12A-1.045, F.A.C., which deals with sales tax on
transportation charges, has been substantially rewritten to
recognize the decision in Florida Hi-Lift v. Department of
Revenue, 571 So.2d 1364 (Fla. 1DCA 1991). In Florida Hi-Lift,
the court found that the rental of equipment was a "sale", that

Rule 12A-1.045, F.A.C., was applicable, and that the
transportation charges, while incidental to the sale, were not
part of the total sales price. In the Florida Hi-Lift case,
equipment was sold F.O.B. Lessor's site and the leasee had the
option of picking up the equipment or having delivery made by
the lessor.

CONCLUSION OF LAW

Rule 12A-1.045, F.A.C., provides that transportation charges are
not a part of the sales price, and as such, not subject to tax
when both of the following conditions are met: 1) the
transportation charges are separately stated on an invoice or
bill of sale; and 2) the transportation charges can be avoided
by a decision or action solely on the part of the purchaser.
Therefore, based on the facts presented, Retailer's
transportation charges would not be subject to tax, because the
charge is separately stated and can be avoided by the customer.
As long as the charges are separately stated and can be avoided
by the purchaser, there are no provisions in Chapter 212, F.S.,
nor the administrative code that require tax to be imposed on
these charges. However, Retailer has the burden of proving that
the customer can avoid the charge for delivery.

This response constitutes a Technical Assistance Advisement
under s. 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 s. 213.22, F.S. Our response is
based on 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 than
expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality

of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Joseph D. Franklin III
Tax Law Specialist
Technical Assistance and
Dispute Resolutions Section

JDF3/
Ctrl# 33035

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