Ezel / Tax Rulings / TX
TX 9002L0980C09 Sales and/or Use Tax (State,Local,MTA) 1990-02-16

Were handling, insurance-premium, and damage-waiver charges taxable when connected with a taxable sale?

Short answer: Handling charges were taxable even if separately stated. A combined handling-and-insurance charge was fully taxable; a separately stated premium underwritten by an insurer was not taxable, but a damage-waiver-style charge was taxable.

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This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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

Handling charges connected with the sale of taxable items were taxable whether or not separately stated.

If the seller combined handling and insurance into one charge, the entire charge was taxable. A separately stated charge was not taxable when it was an actual insurance premium underwritten by an insurance company. If the separately stated amount was really a damage-waiver fee, it was taxable.

Common questions

Could separately stating handling make it nontaxable? No.

What happened to one combined handling-and-insurance fee? The whole amount was taxable.

When was an insurance charge excluded? When separately stated and underwritten as an insurance premium by an insurance company.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 16, 1990

Dear ****:

Your letter questioning the taxability of handling and insurance
charges has been referred to me for a response.

Handling charges are taxable whether or not separately stated when
charged in connection with a sale of taxable items.

If one charge is made for handling and insurance, the total charge
is taxable. If the insurance charge is separately stated and is
an insurance premium, which is underwritten by an insurance
company, then the insurance charge is not taxable. However, if
the separately stated insurance charge is similar to a damage
waiver fee, then the charge is 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 you may call or write Tax
Correspondence. You may call toll free 1-800-252-5555, or our
regular number is 512/463-4600. My extension is 3-4658.

Sincerely,
Sherry Buckley
Tax Correspondence

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