The Department of Revenue recently notified businesses of a Missouri Supreme Court decision concerning an obligation to collect tax on delivery charges. If your business is not currently collecting and remitting tax on delivery charges, this decision may require you to begin doing so.

In Alberici Constructors, Inc. v. Director of Revenue, 452 S.W.3d 632 (Mo. banc 2015), the Missouri Supreme Court held charges for delivery of a rented crane are subject to use tax because the parties intended for delivery of the crane to be part of the crane rental. The Missouri Supreme Court relied upon a previous case, Southern Red-E-Mix Co. v. Director of Revenue, 894 S.W.2d 164 (Mo. Banc 1995), that had identified a number of factors relevant to determining whether delivery is intended to be part of a sale. The factors include:

  • When title passes from the seller to the purchaser;
  • Whether the delivery charges are separately stated;
  • Who controls the cost and means of delivery;
  • Who assumes the risk of loss during delivery; and
  • Whether the seller derives financial benefit from delivery.

In general, if parties intend delivery to be part of the sale of the tangible personal property, the delivery charge is subject to tax even when the delivery charge is separately stated.

Questions concerning delivery charges may be directed to the Department at [email protected]

Frequently Asked Questions:

Q. I don’t have deliveries, why am I receiving this letter?

A. Your business is registered with the Department as an entity selling tangible personal property. The letters were sent as a courtesy in order to notify businesses of the recent Missouri Supreme Court decision. If your business does not currently provide delivery of tangible personal property in Missouri, this notification does not affect your business.

Q. What is tangible personal property?

A. Tangible personal property is any type of property that can be moved, touched or felt. It includes items such as furniture, tools, machinery, household appliances, office supplies, food, or equipment.

Q. What does the phrase “title passing” mean?

A. When ownership of the tangible personal property passes to the customer.

Q. Do I report delivery charges separately on my Sales/Use Tax return?

A. No, you report the delivery charges as part of your gross receipts on your Sales/Use tax return. There is not a separate line on the return for delivery charges.

Q. What if I deliver items from a Missouri location to a location outside of Missouri?

A. Missouri sales or use tax is not imposed on deliveries when title passes to the customer outside of Missouri.

Q. Where can I review the court case discussed in the letter?

A. https://www.courts.mo.gov/file.jsp?id=82573

Q. Are separately stated delivery charges subject to sales tax?

A. Yes, when the delivery is part of the sale.

Q. Are shipping and handling charges taxable?

A. If shipping and handling charges are not part of the sale of tangible personal property, they are not subject to tax if they are separately stated.  If shipping and handling charges are not part of the sale of tangible personal property but are not separately stated, they are subject to tax.

If shipping and handling charges are part of the sale of the tangible personal property, they are subject to tax whether or not they are separately stated. Factors to consider in determining whether shipping and handling charges are part of the sale of tangible personal property include:

  1. When title passes from the seller to the purchaser;
  2. Who assumes the risk of loss during shipping;
  3. Who controls the cost and means of shipping; and
  4. Whether the seller derives financial benefit from shipping.

If you have specific questions concerning the tax treatment of delivery charges related to your personal business situation you may request a letter ruling from the Department. Information on how to submit a letter ruling request can be found here: http://dor.mo.gov/rulings/search.