South Carolina Code of Regulations › Chapter 117 - DEPARTMENT OF REVENUE › Article 11 - SALES AND USE TAX REGULATIONS › Section 117-310 - Freight and Delivery Charges

Current through Register Vol. 48, No. 6, June 28, 2024
Whether or not freight, delivery, or transportation charges may
				be deducted by the seller from the selling price of tangible personal property
				sold for use or consumption, in computing his liability for tax under the sales
				and use tax law, does not depend upon the separate billing thereof, but depends
				upon whether or not the services rendered by the railway company or other
				transporting agency are rendered to such seller or to the purchaser.
If the seller contracts to deliver tangible personal property
				to some designated place, or is obligated under the contract to pay
				transportation charges to some designated place, the transportation services
				are rendered to the seller or user and the selling price of the tangible
				personal property so transported must include the amount of the transportation
				charges. In this event such charges are not deductible by the seller in
				computing his tax liability under the law.
On the other hand, if the seller contracts to sell tangible
				personal property FOB origin, the title to the property passing at such point
				to the buyer and the buyer pays the transportation charges, then the
				transportation services are rendered to the buyer and are not a part of the
				selling price of the vendor. Therefore, such transportation charges should not
				be included by the vendor in computing his tax liability under the law. These
				principles will apply irrespective of whether such charges are separately
				billed by the seller from the tangible personal property sold.
For example:
(a) If
			 the sale is made F.O.B. point of destination or place of business of the buyer,
			 for a lump sum price or a price or a price per unit, in such manner as to
			 indicate that the cost of transportation is a cost to be borne by the seller,
			 the total amount received by the seller constitutes "gross proceeds of sale,"
			 within the meaning of the law. In such case, the seller is not permitted to
			 separate the cost of the goods from the cost of the transportation nor may the
			 seller deduct any estimated or actual cost of transportation from such gross
			 proceeds in making returns under the law.
(b) If the goods are F.O.B. destination under
			 terms by which the purchaser is to pay the freight and deduct such amount from
			 the invoice, the transaction should be treated in the same manner as in
			 paragraph (a) hereinabove, namely the gross proceeds of sale should include the
			 total amount of the agreed sales price, without deduction for freight whether
			 paid by the seller in the first instance or paid by the buyer for the seller
			 and deducted from the invoice.
(c)
			 If the sale is made F.O.B. point of origin, the delivery of the goods to the
			 carrier is generally construed as equivalent to the delivery of the goods to
			 the buyer, and the gross proceeds of sale in such case would not include the
			 freight, whether the freight is by agreement of the parties advanced or prepaid
			 by the seller for the buyer or whether such freight is paid at destination by
			 the buyer. In such cases, the "gross proceeds of sale" only include the agreed
			 sales price of the goods. Any freight so advanced, billed as a special item, is
			 not included as proceeds of the sale, but upon payment is properly treated as a
			 reimbursable expense paid by the seller at the instance and request of the
			 buyer.
(d) No practice of invoicing
			 or billing will entitle the seller to deduct from gross proceeds of sale any
			 cost or expense, actual or estimated, in cases where the seller, by use of his
			 own means of transportation, effects such delivery.
(e) No tax is due on delivery charges by a
			 lessor who, by means of his own transportation facilities, delivers tangible
			 personal property which is the subject of a written lease expressly providing
			 that the lessee assumes all risk of loss or damage to the property from the
			 effective date of the lease. Conversely, when the lessor agrees to assume
			 responsibility for loss or damage to the property during transit, charges by
			 the lessor for such transportation must be included in the tax base. These same
			 principles apply to sale when delivery is by means of the sellers own
			 transportation facilities for a consideration separate and apart from the sales
			 price of the property.