Was a bookseller's separately labeled postage-and-handling charge subject to Texas sales tax?

Plain-English summary

Texas said transportation and delivery charges, including shipping and handling, billed by a seller of taxable items were taxable whether or not separately stated. A narrow exclusion applied to separately stated U.S. Post Office postage that the seller incurred at a client's request to distribute tangible personal property to third-party recipients chosen by the client. The bookseller's charge labeled "P & H" did not qualify, so taxing the full bill was proper.

What this means for you

Calling a charge postage or handling did not by itself remove it from the taxable sales price. The letter limited the postage exclusion to the specific third-party mailing arrangement it described and expressly excluded delivery by private carriers.

Common questions

Were ordinary shipping and handling charges taxable? Yes, when billed by a seller of taxable items under the facts and Rule 3.303 described in the letter.

When could separately stated postage be excluded? When the seller incurred U.S. Post Office postage at the client's request to send tangible personal property to third-party recipients designated by the client.

Did the exclusion cover private-carrier delivery? No.

Did the bookseller's P&H charge qualify? No. The Comptroller said the seller properly taxed the total bill.

Citations and references

• 34 Tex. Admin. Code Rule 3.303 — identified by the letter as governing transportation and delivery charges.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9103L1094B12

Original ruling text

March 22, 1991

Dear **:

Thank you for your recent letter. As I understand it, you
wanted to know about taxability of shipping, handling and
postage charges.

Enclosed Rule 3.303 governs this area, whether or not
separately stated, transportation and delivery charges
(including shipping and handling) billed to a customer by a
seller of taxable items are subject to tax.

There is a limited exclusion for separately stated charges
for postage when billed by the seller to a client if the
cost of the postage was incurred by the seller at the
request of the client to distribute tangible personal
property to third party recipients designated by the client.
This refers only to United States Post Office postage, and
does not include delivery by private carriers.

Based on the copy of the bill you submitted, this limited
exclusion does not apply to your transaction with the book
seller. The seller properly added tax to the total bill,
including the charge designated as "P & H".

This opinion is based on the facts presented. Different
facts, though similar, might lead to different answers. If
you have further questions, feel free to write or call
463-4600. My direct number is 463-3889.

Sincerely,

John Christian
Attorney
Tax Administration