Ezel / Tax Rulings / TX
TX 8802L0892D09 Sales and/or Use Tax (State,Local,MTA) 1988-02-22

Were freight and U.S. postage charges taxable when a parts seller arranged shipping and rebilled the customer?

Short answer: Yes. Freight or postage that the seller incurred and rebilled to the customer was taxable. Transportation was not taxable when the customer arranged pickup and the freight company billed the customer directly.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 a taxpayer-specific February 1988 Texas Comptroller letter. It says the opinion may change if the facts differ. Transportation, delivery, freight, postage, and separately stated charge rules may have changed; verify current law. The source repeats its postage paragraph and cites different Rule 3.303 subsections, but both versions state that the described seller-incurred postage was taxable. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
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

When a third-party carrier billed the parts seller and the seller then billed the customer, the transportation charge was taxable under Rule 3.303(a).

When the customer arranged pickup and the freight company billed the customer directly, the transportation charge was not taxable under Rule 3.303(b).

Separately charging the customer for U.S. postage, including stamps, that the seller incurred to send the parts was also taxable. The source prints that postage statement twice and cites different subsections, but the stated result is the same. It notes that Rule 3.303(d) covered situations where postage would not be taxable without describing those situations.

What this means for you

Who arranged the shipment and who was billed controlled the historical freight result. Merely stating seller-incurred postage separately did not make it nontaxable.

Common questions

Was freight taxable when the seller rebilled it? Yes.

What if the customer hired and paid the carrier directly? The transportation charge was not taxable.

Did separately stated postage become exempt? No, not for the described seller-incurred postage.

Citations and references

  • 34 Tex. Admin. Code Rule 3.303(a)-(d) — transportation, delivery, and postage provisions cited by the letter.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN 78774

February 22, 1988

Dear ***:

According to your letter, your company ships parts to customers via third
party carriers. The shipping company bills your company and your company
bills the customer. Sales tax is due on the transportation charge to the
customer. See 3.303(a), enclosed, relating to Transportation and Delivery
Charges.

If the customer arranges for the parts to be picked up by a freight
company and the freight company bills the customer for the transportation
charge, then the transportation charge will not be taxable. See Rule
3.303(b).

Postage charges means U.S. postage and would include stamps. If your
company charges a separate amount for postage incurred in sending the parts to
your customer, the postage charge is taxable. See Rule 3.303(b).

Postage charges means U.S. postage and would include stamps. If your
company charges a separate amount for postage incurred in sending the parts to
your customer, the postage charge is taxable. See Rule 3.303(a) and (c).
Item (d) outlines situations where postage charges would not be taxable.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call our
toll-free number
1-800-531-5441. The regular number is 512/463-4600. You may write me
at the Tax Policy Division.

Sincerely,
(Mrs.) Jo Ann Dieck
Tax Policy Division

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