Are Shipping and Handling Taxable in Georgia?
Understand Georgia sales tax rules for shipping and handling charges. Learn when delivery fees are taxable and how to ensure compliance.
Understanding the taxability of shipping and handling charges in Georgia is important for businesses and consumers to ensure proper compliance. This topic involves nuances that require a detailed understanding for anyone involved in sales of tangible personal property in the state.
Determining Taxability of Delivery Charges
In Georgia, if an item is subject to sales tax, its delivery charges are generally also taxable. This includes postage, freight, transportation, and handling fees. The Georgia Department of Revenue considers these charges an integral part of the overall sales price. This applies regardless of the delivery method, whether by common carrier, private company, or the seller’s own vehicle. For example, if a taxable shirt costs $20 and delivery is $5, sales tax is imposed on the total $25.
Factors Influencing Taxability
Even when delivery charges are separately itemized on an invoice, they remain taxable if they relate to the sale of taxable goods in Georgia. The state considers such charges part of the sales price, irrespective of how they are presented.
The optionality of delivery does not alter its taxability for taxable goods. If the underlying goods are subject to sales tax, the delivery charge is taxable, even if the customer could have chosen to pick up the item. However, if the goods are exempt from sales tax, their associated delivery charge is also exempt. The tax status of the item dictates the tax status of its delivery.
When a shipment includes both taxable and non-taxable items, the seller has options for applying sales tax to the delivery charge. One approach is to charge sales tax on the entire shipping fee. Alternatively, the seller can calculate sales tax on a prorated portion of the delivery charge, based on either the sales price or the weight of the taxable items within the mixed shipment. Businesses must maintain clear records to support the computation method chosen for mixed shipments.
Invoicing and Record Keeping
Businesses selling taxable goods in Georgia must clearly itemize shipping and handling charges on invoices. This ensures sales tax is correctly applied and displayed to the customer.
Maintaining accurate and detailed records of all sales transactions, including shipping charges and collected sales tax, is important for compliance. These records support tax filings and may be required during state audits.