Monday, June 16, 2014

Sales Tax Tip - Freight Charges in Illinois

Bronze cast of the model of Daniel Chester French's sculpture at the Lincoln Memorial
While this is specific to Illinois, it will help the rest of you understand how damn tricky these laws can be.  And don't take my word for the following - read the articles mentioned, and do your own research.

By default, freight charges on taxable purchases are taxable in Illinois.  However, they are not taxable if:
the charges are separately agreed to and

the charges are reasonable.  This means that the billing for the freight charge can't exceed the amount that was actually charged to the vendor.  In other words, the vendor can't make money on the "freight charge."
What the hell do we mean by "agreed to?" Based on this court case (beware - it's a PDF file), an indicator of "agreed to" is that the charges not just be separately stated, but that the customer has the ability to pick up the goods on that purchase.  Internet purchases generally don't give you that option, so freight is taxable on most internet purchases.

 Remember, don't take my word for it - there are more details.  Read the court case, read this article, and take a look at this one which is even more complete.

Still murky, right?  But if it makes you feel better, the option to pick up the goods is part of the rules in a few other states too.

The Sales Tax Guy

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