N.J. Admin. Code § 18:24-27.2

Current through Register Vol. 56, No. 21, November 4, 2024

Section 18:24-27.2 - Delivery charges

(a) "Delivery charges" means charges by the seller of tangible personal property or services for the preparation and delivery to a location designated by the purchaser of tangible personal property or services performed upon tangible personal property. Examples of delivery charges include, but are not limited to:

1. Transportation;

2. Shipping;

3. Postage;

4. Handling;

5. Crating; and

6. Packing.

(b) Delivery charges are part of the receipt or sales price for the retail sale of tangible personal property delivered to a New Jersey location or for the retail sale of services performed on tangible personal property delivered to New Jersey.

1. Whether the delivery charges are separately stated on the invoice has no effect on taxability.

2. Delivery charges are not taxable if the sale itself is not taxable. When there is a taxable receipt for the retail sale of tangible personal property or services, then the amount charged for delivery to an address in New Jersey designated by the customer is part of the taxable receipt.

(c) If a shipment includes both exempt and taxable property, the seller should charge the sales tax proportionately according to either the percentage of:

1. The sales price of taxable items in the shipment compared to the total sales price of all items in the shipment; or

2. The weight of the taxable items in the shipment compared to the total weight of all items in the shipment.

Example 1: Customer makes a retail purchase of clothing from a mail order seller and has the items shipped to his home in New Jersey. Invoice is as follows:

Sweater . . . . . . . . . . . . . . . $ 30.00

Gloves . . . . . . . . . . . . . . . $ 10.00

Hat . . . . . . . . . . . . . . . . . $ 15.00

Merchandise Total . . . . . . . . . . $ 55.00

Shipping . . . . . . . . . . . . . . $ 4.00

No sales tax will be imposed on this purchase. The purchase of clothing is exempt from tax. Therefore, the shipping charge will be exempt as well.

Example 2: New Jersey based interior designers who sell items to their customers purchase fabric from an online seller, which they will use to make curtains for a customer. The invoice is as follows:

Fabric . . . . . . . . . . . . . . . . $ 40.00

Shipping . . . . . . . . . . . . . . . $ 5.00

Because the designers are purchasing the items for resale, they may claim a resale exemption on their purchase of the fabric that will become a physical component of curtains that they will sell to their customer. There is no tax on the fabric or the shipping charge. Since the purchase of the fabric will be exempt from sales tax, the charge for shipping the fabric to the designer will also be exempt.

Example 3: Parents make a retail purchase from an online seller and ask to have the merchandise shipped to their son's college dormitory in New Jersey. Invoice is as follows:

Boots . . . . . . . . . . . . . . . . $ 50.00

Backpack . . . . . . . . . . . . . . . $ 35.00

Clock . . . . . . . . . . . . . . . . $ 15.00

Merchandise Total . . . . . . . . . . $ 100.00

Shipping and handling . . . . . . . . $ 6.00

N. J. sales tax . . . . . . . . . . . $ 3.71

In this example, the tax on the shipping charge was allocated according to the proportion of the total sale that was taxable. Half of the $ 100.00 sale was for taxable items (backpack and clock). Therefore, sales tax was collected on the taxable merchandise and on half of the $ 6.00 shipping and handling charge (7% tax on $ 50.00 merchandise is $ 3.50 and 7% tax on $ 3.00 shipping and handling charge is $ .21, for a total of $ 3.71 sales tax).

N.J. Admin. Code § 18:24-27.2

Amended by 48 N.J.R. 824(a), effective 5/16/2016