LR 8359
Taxability of Shipping and Handling for Products Sold Online
May 28, 2025
Dear Applicant:
This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated April 21, 2025.
The facts as presented in your letter ruling request and subsequent phone call are summarized as follows:
Applicant has a customer that sells shoes over the internet. They have a limited number of brick-and-mortar stores, none of which are in Missouri. Orders over the internet are shipped via common carrier, and customers are required to pay a separately stated charge for shipping and handling in addition to the shoe price.
ISSUE:
Are Applicant’s shipping and handling fees subject to sales tax?
RESPONSE:
Yes. Applicant’s fee for shipping and handling is subject to sales tax.
Section 144.020.1, RSMo, provides “[a] tax is hereby levied and imposed […] upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state.”
Section 144.010.1(4), RSMo, defines “Gross Receipts” as:
[T]he total amount of the sale price of the sales at retail including any services other than charges incident to the extension of credit that are a part of such sales made by the businesses herein referred to, capable of being valued in money, whether received in money or otherwise[.]
Missouri Code of State Regulations 12 CSR 10-103.600(3)(A)(1) provides:
If the purchaser is required to pay for the service as part of the sale price of tangible personal property, the entire sale price is subject to tax.
Applicant charges a bundled shipping and handling fee to its customers for internet orders. This fee is intended to be part of the transaction and is mandatory to complete the transaction. Because the non-taxable shipping charge is combined with the taxable handling charge and the shipping charge cannot be separated from the handling charge, the total separately stated shipping and handling charge is subject to tax. Applicant should collect and remit Missouri sales tax on the total shipping and handling charge separately stated on its customers’ invoices.
This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.
Should additional information be needed, please contact Associate Counsel J. Ross Shelton, General Counsel’s Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.
Sincerely,
Trish Vincent