FAQ: Is postage taxable?

One of the questions I've gotten a couple of times in recent days is whether or not "postage" is taxable. I think people are getting hung up on the fact that "postage" seems protected somehow. But think of it this way. It's just a delivery charge. So the real question is whether or not delivery charges are taxable in your state.

I had a question today from a seminar participant who was being charged tax on 1099's that a printer was mailing to her vendors. He was charging tax on the postage. In her state, delivery charges are taxable. And this postage was essentially the delivery charge for shipping product produced by the vendor to the customer's accounts.

Logically, this sounds like it's taxable to me.

Remember, the issues are:

NOT that it's postage.

ARE delivery charges by the vendor taxable in the state at issue?

Sales Tax Guy
See disclaimer

Why not let my customer pay the use tax?

If my customer pays the use tax, why do I have to charge him tax. Can't I get a letter from him that says he'll take care of it?

The answer is, generally, NO! The state doesn't trust your customer (and with good reason, I might add) to pay the use taxes. You're the seller and you are primarily responsible to collect the sales (or use) taxes from the customers. Even if they "promise" they'll pay.

Most states have a "direct pay permit" which DOES get you off the hook. This is a state-sanctioned way for a customer to tell you, "we'll take care of the use tax ourselves." The customer has to apply for the permit, and they will generally go through more audits than the rest of us. That's because the state really DOESN'T TRUST anyone to pay their use taxes.

Bottom line, you have to collect the taxes from your customer.

Sales Tax Guy