South Carolina: Department of Revenue Addresses Delivery Charges

The South Carolina Department of Revenue has issued guidance addressing the taxability of delivery charges associated with sales of tangible personal property. Under South Carolina law, sales and use tax is imposed on the “gross proceeds” of a sale, which includes costs for materials, labor or services, transportation costs, and other expenses. The ruling provides that delivery charges are included in the tax base and subject to sales and use tax if the delivery is (1) by use of the retailer’s truck, (2) by use of common carrier and the sale is F.O.B. point of destination or place of business of buyer, or (3) by delivery from a factory directly to the customer, provided that transportation is paid for by the seller. The Department also provides guidance on when delivery charges would not be included in the tax base. For example, charges for delivering tangible personal property are not taxable when associated with exempt retail sales, wholesale sales, or taxable sales delivered F.O.B Point of Origin by a common carrier. In a bundled transaction containing both taxable and exempt sales, delivery charges can be prorated based on taxable sales if reasonably possible. Otherwise, the entire charge is subject to tax. The ruling includes a number of questions and answers with examples to illustrate when tax applies. For more information on Revenue Ruling 19-9, please contact Nicole Umpleby at 704-335-5586.