Wis. Admin. Code Department of Revenue Tax 11.94

Current through August 26, 2024

Section Tax 11.94 - Delivery charges

(1) DEFINITION. "Delivery charges" is defined in s. 77.51(2m), Stats., to mean charges by a seller to prepare and deliver tangible personal property, or items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., or services to a location designated by the purchaser of the tangible personal property, or items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., or services, including charges for transportation, shipping, postage, handling, crating, and packing.

(2) TAXABILITY OF DELIVERY CHARGES.

(a) When a seller charges a purchaser for the delivery of taxable tangible personal property or items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., the seller's total charge, including any delivery charge, shall be subject to the sales or use tax. It is immaterial whether delivery is made by the seller's vehicle, a common or contract carrier, or the United States postal service.

Example: Retailer A sells clothing to Customer B for $100. Retailer A also charges Customer B $10 for delivery of the clothing. Retailer A delivers the clothing to Customer B at a Wisconsin address for which the total applicable sales and use tax rate is 5%. The correct computation of the tax due is as follows:

Selling price of clothing .........	$100.00
Delivery charge ................	-10.00
Subtotal ...................	$110.00
Tax at 5% ($110 x 5%).......	-5.50
Total ......................	$115.50

(b) When a seller charges a purchaser for the delivery of nontaxable or exempt tangible personal property or items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., the seller's total charge, including any delivery charge, is not subject to the sales or use tax.

(c)

1. If a shipment includes both taxable and nontaxable property and items the seller shall determine and set forth on the invoice the portion of the delivery charge reasonably allocable to the taxable property and items. The portion allocated to nontaxable property and items is not taxable. If no allocation is made, the total delivery charge shall be taxable.

2. The allocation in subd. 1. is computed based on either:

a. The total sales price of all of the property and items subject to tax as compared to the total sales price of all of the property and items included in the shipment.

b. The total weight of all of the property and items subject to tax as compared to the total weight of all of the property and items included in the shipment.

(d) A Wisconsin purchaser who purchases taxable property and items without tax for use in Wisconsin is subject to the use tax or sales tax pursuant to s. Tax 11.14(2) (c) based on the "purchase price" of the property and items to the purchaser. The "purchase price" shall include delivery charges paid by the Wisconsin purchaser to the seller for shipment of the property and items to the purchaser. The "purchase price" does not include delivery charges paid by the Wisconsin purchaser to a carrier independent of the seller when the purchaser arranges for the transportation.

Example: If the "delivered price" of a carload of lumber is $6,000, including delivery charges, and the purchaser pays the delivery charges directly to the common carrier and deducts the payment from the amount due the seller, the delivery charges are borne by the seller and are included in the seller's measure of the tax.

(3) DIRECT MAIL.

(a) Delivery charges for "other direct mail" are not subject to sales or use tax if the delivery charges are separately stated on the invoice, bill of sale, or similar document that the seller gives to the purchaser. Delivery charges for "advertising and promotional direct mail" are exempt from sales and use tax regardless of whether they are separately stated on the invoice, bill of sale, or similar document.

(b) "Direct mail" is defined in s. 77.51(3pd), Stats., to mean printed material that is delivered or distributed by the U.S. postal service or other delivery service to a mass audience or to addressees on a mailing list provided by or at the direction of the purchaser of the printed material, if the cost of the printed material or any tangible personal property or items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., included with the printed material is not billed directly to the recipients of the printed material. "Direct mail" includes any tangible personal property, or items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., provided directly or indirectly by the purchaser of the printed material to the seller of the printed material for inclusion in any package containing the printed material, including billing invoices, return envelopes, and additional marketing materials. "Direct mail" does not include multiple items of printed material delivered to a single address.

Wis. Admin. Code Department of Revenue Tax 11.94

Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (1) (e), r. (2) (b), renum. (2) (c), (d) and (e) to be (2) (b), (c) and (d), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (c), Register, July, 1987, No. 379, eff. 8-1-87; am. (1) (e) and (2) (b) and (d), Register, June, 1991, No. 426, eff. 7-1-91; reprinted to restore dropped copy in (1) (b), Register, December, 1995, No. 480; am. (1) (d), (2) (a) and (c), r. (2) (d), Register, October, 1999, No. 526, eff. 11-1-99; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (3) (a) Register November 2010 No. 659, eff. 12-1-10; CR 13-011: am. (3) (a) Register August 2013 No. 692, eff. 9-1-13.

Section Tax 11.94 interpretss. 77.51(2m), (3pd), (12m) (a) 4. and (b) 4., (14) (intro.), and (15b) (a) 4. and (b) 4., 77.52 (1), and 77.585 (8), Stats.

The interpretations in s. Tax 11.94 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The definitions of "delivery charges" and "direct mail," and the change of the term "gross receipts" to "sales price" and the separate impositions of tax on coins and stamps sold above face value under s. 77.52(1) (b), Stats., certain leased property affixed to real property under s. 77.52(1) (c), Stats., and digital goods under s. 77.52(1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (b) The definitions of "advertising and promotional direct mail" and "other direct mail" became effective May 27, 2010, pursuant to 2009 Wis. Act 330; and (c) The sales and use tax exemption for advertising and promotional direct mail, which includes the delivery charges for advertising and promotional direct mail, became effective July 1, 2013, pursuant to 2011 Wis. Act 32.