Illinois Administrative Code › Title 86 - REVENUE › Part 130 - RETAILERS' OCCUPATION TAX › Subpart D - GROSS RECEIPTS › Section 130.415 - Transportation and Delivery Charges

Current through Register Vol. 48, No. 28, July 12, 2024
a)
				Until November 19, 2009:
1) Transportation
				and delivery charges are considered to be freight, express, mail, truck or
				other carrier, conveyance or delivery expenses. These charges are also many
				times designated as shipping and handling charges.
2) The answer to the question of whether a
				seller, in computing his or her Retailers' Occupation Tax liability, may
				deduct, from his or her gross receipts from sales of tangible personal property
				at retail, amounts charged to customers on account of the seller's payment of
				transportation or delivery charges in order to secure delivery of the property
				to customers, or on account of the seller's incurrence of expense in making the
				delivery himself or herself, depends not upon the separate billing of
				transportation or delivery charges or expense, but upon whether the
				transportation or delivery charges are included in the selling price of the
				property that is sold or whether the seller and the buyer contract separately
				for transportation or delivery charges by not including those charges in the
				selling price. In addition, charges for transportation and delivery must not
				exceed the costs of transportation or delivery. If those charges do exceed the
				cost of delivery or transportation, the excess amount is subject to
				tax.
3) If transportation or
				delivery charges are included in the selling price of the tangible personal
				property that is sold, the transportation or delivery expense is an element of
				cost to the seller within the meaning of Section 1 of the Retailers' Occupation
				Tax Act, and may not be deducted by the seller in computing Retailers'
				Occupation Tax liability.
4) If the
				seller and the buyer agree upon the transportation or delivery charges
				separately from the selling price of the tangible personal property that is
				sold, the cost of the transportation or delivery service is not a part of the
				"selling price" of the tangible personal property sold, but instead is a
				service charge, separately contracted for, and need not be included in the
				figure upon which the seller computes Retailers' Occupation Tax liability.
				Delivery charges are deemed to be agreed upon separately from the selling price
				of the tangible personal property being sold so long as the seller requires a
				separate charge for delivery and so long as the charges designated as
				transportation or delivery or shipping and handling are actually reflective of
				the costs of the shipping, transportation or delivery. To the extent that
				delivery charges exceed the costs of shipping, transportation or delivery, the
				charges are subject to tax. The best evidence that transportation or delivery
				charges were agreed to separately and apart from the selling price is a
				separate and distinct contract for transportation or delivery. However,
				documentation that demonstrates that the purchaser had the option of taking
				delivery of the property at the seller's location, for the agreed purchase
				price, or having delivery made by the seller for the agreed purchase price plus
				an ascertained or ascertainable delivery charge, will suffice.
5) Incoming Transportation Costs
Transportation or delivery charges paid by a seller in
				  acquiring property for sale are merely costs of doing business to the seller
				  and may not be deducted by that seller in computing Retailers' Occupation Tax
				  liability, even though the seller passes those costs on to customers by quoting
				  and billing those costs separately from the selling price of the tangible
				  personal property that he or she sells. The same is true of transportation or
				  delivery charges paid by the seller in moving property to some point from which
				  the property (when subsequently sold) will be delivered or shipped to the
				  purchaser.