If my store charges customers a separate fee for a personal shopper to pick their groceries, and a separate fee for home delivery, are either of those service charges subject to sales tax?

Plain-English summary

A supermarket cooperative lets customers order groceries online for a personal shopper to pick and either hold for in-store pickup or deliver to the customer's home. Customers pay the same prices for groceries whether they shop themselves or use a personal shopper, plus a flat personal-shopping fee, and an additional flat delivery fee if they choose home delivery. The Department drew a clear line between the two service fees.

The personal shopping fee is not taxable. Grocery-picking assistance isn't one of New York's specifically enumerated taxable services, and here it's a genuinely optional, separately identifiable service — customers can always shop themselves at the same prices, so the shopping fee is properly treated as its own untaxed transaction.

The home delivery fee is different. Delivery charges are legally part of the taxable "receipt" for a sale, and once the store is delivering rather than letting the customer pick up in-store, the personal shopper's work of assembling and packaging the order becomes an inseparable part of the delivery service — like the cost of hauling trash to a dump can't be split from the pickup service itself. So for home delivery, the shopping/assembly/delivery charges merge into one bundled receipt. Whether that receipt is taxed then depends on what's in the order: if the customer bought any taxable item (soda, candy, paper goods, a taxable prepared meal, etc.) alongside exempt groceries, the entire delivery-related charge is taxable, even though the taxable item itself might be a small part of the order. If the whole order is exempt food, none of it — including the delivery fee — is taxed.

What this means for you

Grocery stores and food retailers offering personal shopping and/or delivery

Keep the two services conceptually distinct: an in-store personal shopping fee, where the customer could have shopped for themselves at the same price, stays untaxed as a genuinely separate optional service. But once you deliver to the customer's home, the assembly/shopping work folds into the delivery charge as one bundled, taxable-or-not-as-a-whole receipt — and it becomes fully taxable the moment even one taxable item rides along in that order.

Any retailer selling a mix of taxable and exempt items with a shared delivery charge

If you bill one delivery charge covering a mixed order of taxable and exempt goods, the entire delivery charge is taxable — you can't allocate part of it to the exempt items. The only way around this is separately stating and separately delivering (or at least billing) the taxable and exempt portions, per TSB-M-92(2).

Accountants and tax professionals

Note the opinion is explicitly premised on the shopping service being optional and priced identically to self-service — if a retailer instead operated as a catalog/order-only warehouse where customers couldn't shop themselves, the entire charge (including "shopping"/picking costs) would be baked into the taxable receipt for the goods themselves, regardless of any separate line-item billing.

Common questions

Q: We charge a flat fee for a personal shopper to pick groceries a customer will pick up in-store — is that taxable?
A: Not automatically. If it's a genuinely optional service (the customer could shop themselves for the same price) and it's separately identified, the shopping fee itself is not taxable.

Q: Does that change once we deliver the order to the customer's home instead of in-store pickup?
A: Yes. For home delivery, the shopping/assembly work becomes part of the delivery charge, and the whole delivery-related charge is taxed based on whether the order contains any taxable items.

Q: If 90% of an order is exempt groceries and 10% is taxable snacks, is the whole delivery charge taxed?
A: Yes, under the guidance cited here — when one combined delivery charge covers both taxable and exempt items, the entire charge is part of the taxable receipt.

Q: How can we avoid taxing the whole delivery charge on a mixed order?
A: Separately state charges for the taxable and nontaxable portions of the sale (not just the delivery charge) — sales tax isn't collected on the nontaxable portion when the underlying sales themselves are separately listed.

Q: Does this ruling apply to any grocery store's shopping/delivery fees?
A: Not automatically. An advisory opinion binds the Department only as to the taxpayer who requested it and only on the facts described, though the bundled-receipt reasoning it applies reflects general Department policy.

Citations and references

Statutes and guidance:

• Tax Law §1105(a) (sales tax on tangible personal property); §1105(d) (certain prepared food)
• Tax Law §1101(b)(3) (receipt; delivery charges)
• TSB-M-92(2) (Delivery Charge Added to Taxable Receipt, Jan. 13, 1992)

Cited opinion and case:

• Paul Lorenzo, TSB-A-94(46)S
• Penfold v State Tax Commission, 114 AD2d 696 (1985)

Source

• Landing page: NY Sales Tax Advisory Opinions, 2009
• Original opinion: TSB-A-09(22)S

Original ruling text

New York State Department of Taxation and Finance

TSB-A-09(22)S
Sales Tax
May 27, 2009

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S090120B

Petitioner name and address redacted, requested an advisory opinion as to whether its separate
charges for providing a personal shopping service and its separate additional charges for home delivery
service are subject to the sales and use tax. We conclude that Petitioner’s charges for personal shopping
service are not subject to the sales and use tax but that its charges for home delivery service are subject to
sales and use tax if the customer has purchased any taxable property or services.
Facts
Petitioner is a cooperative that operates numerous supermarkets in the United States, including
supermarkets located in the state of New York. Petitioner is operated by its members and references to
Petitioner also refer to its members. Petitioner predominantly sells exempt food items at its supermarkets.
Petitioner offers personal shopping services to its customers. Customers place their shopping
order online via Petitioner’s website to request the assistance of a personal shopper. Via the website,
customers select the items to be purchased. In addition to selecting their purchases, customers may add
comments (e.g., extra lean turkey, ripe bananas, etc.) to their order, which allows personal shoppers to
best meet the customers’ needs. If a customer has questions related to the order, the customer may call
Petitioner and speak directly with the personal shopper.
The personal shopper shops for the groceries based upon the customer’s personal shopping list.
When the groceries are ready for pick-up, the customer drives in to Petitioner’s designated parking area
and the personal shopper loads the groceries into the customer’s vehicle. Alternatively, customers may
elect to have their groceries delivered by Petitioner directly to their homes. Petitioner charges customers
choosing to have their purchases delivered directly to their homes a separate delivery fee.
Customers may pay for their orders in the same way as if they had shopped in the store
themselves. Petitioner accepts cash, checks, credit cards, debit cards and gift cards in payment for the
goods purchased and the shopping and delivery services. The personal shoppers are employees of
Petitioner and receive payments for their performance of shopping services from Petitioner as employees
of Petitioner. Petitioner charges customers the same prices for their purchases assembled by personal
shoppers as the customers would be charged if the customers shopped for the groceries at the supermarket
themselves. Petitioner charges customers a separate personal shopping service fee. This is a standard
fixed fee which neither depends upon nor fluctuates based on the cost or number of items purchased.
Analysis
As presented for the purposes of this Opinion, Petitioner’s customers have the option of shopping
for groceries by themselves without resort to the services of Petitioner’s personal shoppers. The
customers doing their own shopping and those using the personal shopping services of Petitioner’s
employees pay the same price for the same groceries and goods. Thus, it appears that the personal

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TSB-A-09(22)S
Sales Tax
May 27, 2009

shopping service offered by Petitioner to its customers is a separately identifiable, optional, and separately
contracted service.
The fees for the personal shopping service, as described in this Opinion, are charges for a service
separate and distinct from the charges to a customer for the tangible personal property and services taxed
under Tax Law § 1105(d) (e.g., heated meals, catering, etc.) that are purchased at the supermarket.
While all tangible personal property is subject to tax under Tax Law §1105(a) (unless otherwise
exempted); only the specifically enumerated services in Tax Law §1105 are subject to tax. Petitioner’s
personal shopping service is not among the enumerated services subject to sales or use tax. Thus,
Petitioner’s separate charge for the performance of the shopping service with respect to groceries and
other items and services picked up by customers at Petitioner’s supermarkets is not taxable. See Paul
Lorenzo, Adv Op Comm T & F, September 28, 1994, TSB-A-94(46)S.
This Opinion presumes that Petitioner’s shopping service is being performed at the same
supermarket locations where customers may themselves individually shop for their groceries and thereby
avoid Petitioner’s charges for the services of the personal shoppers in assembling customer orders. If
Petitioner operated as a catalog warehouse where customers could not individually shop and assemble
their own purchases and Petitioner’s charges for purchases from such location always included its
operational expenses of assembling and packaging the customer orders, the whole charge for the property
purchased, including the expense of picking and packaging a customer’s order, would be considered the
receipt for sales tax purposes. See Tax Law §1101(b)(3).
Petitioner's charge for its shopping service is considered part of the receipt for sales tax purposes
if groceries are delivered by Petitioner to the customer’s home. Section 1101(b)(3) of the Tax Law
provides that the receipt is the amount of the sale price of any property and the charge for any taxable
service and includes charges by the vendor to the purchaser for shipping and delivery. Accordingly, if
Petitioner provides home delivery service for grocery items, the receipt includes the cost of the grocery
items and the delivery fee. In the case of home delivery, Petitioner must first assemble and package the
customer’s order before it can deliver the groceries to the customer. Thus, in the case of home delivery,
the personal shopping service constitutes an integral aspect of the home delivery that cannot reasonably
be reckoned a separate service arising from a different transaction. See Penfold v State Tax Commission,
114 AD2d 696 (1985) (determining that the cost for the disposal of refuse was an inseparable element of
the integrated service of picking up and delivering trash to the dump). Therefore, Petitioner’s receipt for
home delivery of the groceries is the sum total of Petitioner’s charges for the groceries, assembling,
packaging, and transportation, regardless of whether the charges are separately stated on the bill and
invoice.
Petitioner’s customers may be purchasing a mix of taxable items (e.g., soda, candy, paper goods,
detergent, etc.) or services taxed under Tax Law §1105(d) (e.g., heated meals) and exempt items (e.g.,
food, juice, etc) from Petitioner. Technical Services Bureau Memorandum - Delivery Charge Added To
Taxable Receipt Effective September 1, 1991, dated January 13,1992, TSB-M-92(2), provides:
When separate charges for the taxable and nontaxable sales are made, sales tax is not to
be collected on the nontaxable portion. If both taxable and nontaxable sales are separately listed
on one bill, but only one charge for delivery is made, the entire delivery charge becomes part of
the taxable portion of the receipt and therefore, subject to tax.
Thus, if any taxable property or service is included in the order delivered, the fee charged for home
delivery is part of the receipts subject to tax in its entirety. In this situation, Petitioner should collect

TSB-A-09(22)S
Sales Tax
May 27, 2009

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appropriate tax on the charges for the home delivery, assembling, and packaging, and the taxable
groceries and services, but would not collect tax on the separate charges for the purchase of exempt food
items. If none of the groceries and other items purchased by a customer is subject to sales tax, then the
receipts for the property, including the charges for home delivery, assembly, packaging, and
transportation are not subject to sales tax. If all of the items sold to a customer are taxable, then the total
receipts from the sale are subject to sales tax.

DATED: May 27, 2009

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.