12A-1.045. Transportation Charges

(1) “Transportation charges” include carrying, delivery, freight, handling, pickup, shipping, and other similar charges or fees.

(2) Transportation charges which are not separately stated on an invoice or bill of sale, but are included in the sales price of taxable tangible personal property, are subject to tax.

(3)(a) Where the seller agrees to deliver tangible personal property to some designated place and the purchaser cannot elect to avoid the charge for transportation services, the charge for the transportation service is subject to tax, even if separately stated on an invoice or bill of sale.

(b)1. Example: X is in the business of selling liquefied petroleum (L.P.) gas, gas tanks, and other related equipment. Y agrees to purchase a 500 gallon above ground tank from X to be placed at Y’s place of business and to make future purchases of L.P. gas from X. X requires a delivery fee of $25 for each L.P. gas tank that it sells and will not allow the customer to pick up the tank nor make arrangements with any other transportation company to deliver the tank to the designated place. Since the $25 delivery fee is required by the seller and is not an option to the buyer, the invoice correctly includes the $25 delivery charge in the amount subject to tax as follows:

	500 Gallon L.P. Gas Tank	$500.00
	Delivery Fee	$25.00
	Total Taxable Amount	$525.00

2. Example: X places an order to purchase a jacket for $100 with a mail order company. The mail order company’s policy is that all items are shipped F.O.B. destination through the U.S. mail or by common carrier as the method of shipping its merchandise to its customers. The mail order company makes a separate charge to all of its customers for transportation based on the weight of the item sold and the distance required to deliver the item to the desired place. Since the method of shipping is mandated by the mail order company, the transportation charge becomes a part of the sales price. The invoice correctly includes the transportation charge in the amount subject to tax as follows:

	Jacket #5054	$100.00
	Shipping and Handling Charges	$8.75
	Total Taxable Amount	$108.75

(4)(a) The charge for transportation services is not subject to tax when both of the following conditions have been met:

1. The charge is separately stated on an invoice or bill of sale; and

2. The charge can be avoided by a decision or action solely on the part of the purchaser. (See subsection (5) for shipping of tangible personal property F.O.B. origin.)

(b)1. Example: B is in the business of renting furniture and appliances. B rents a refrigerator to Customer C. B’s policy is to allow customers to elect whether to pick up the rental property at B’s place of business or to agree to a $25 delivery fee which B separately states on the customer’s invoice. Since the separately stated $25 delivery fee could be avoided by a decision or action on the part of C, the $25 delivery fee is not subject to tax.

2. Example: D is in the business of selling appliance repair parts. E desires to purchase a hot water heater element from D. D must order the hot water heater element for E from a wholesaler. D requires E to pay the transportation charges only if E elects to have the item shipped directly from the wholesaler to E’s residence. E requests that D instruct the wholesaler to ship the hot water heater element directly to E’s residence. Since the transportation charge is incurred at the election of E and could have been avoided by E, the invoice correctly excludes the transportation charge from the amount subject to tax as follows:

	Water Heater Element	$25.00
	Total Taxable Amount	$25.00
	Shipping and Handling Charges	$3.25

3. Example: X places an order for a piece of equipment for $300 with a mail order company. The mail order company allows X to choose a method of shipping or will allow X to pick up the piece of equipment at the mail order company’s place of business. Since X can make an election to avoid the charge for transportation services, the invoice correctly excludes the transportation charges as follows:

	Equipment	$300.00
	Total Taxable Amount	$300.00
	Shipping and Handling Charges	$8.75

(5) If the seller contracts to sell tangible personal property F.O.B. origin, the title to the property passes at the point of origin. Since the title to the property passes at the point of origin, transportation services arranged by the seller and rendered to the buyer are not a part of the taxable selling price, provided the transportation charges are separately stated. Where the transportation charges are billed by the seller to the buyer, but documentation is inadequate to establish the point at which title passes to the buyer, it is presumed that the tangible personal property was sold F.O.B. origin and the title to the property passes at the point of origin. In such instances, the transportation charges are not considered a part of the selling price of the property, if separately stated.

(a) Example: Company B is in the business of selling large industrial type generators. Company B is located out-of-state. Due to the size and cost of the generators and the cost of delivery of the generators, Company B only sells the generators F.O.B. origin. Company C purchases a generator for $1 million for its own use and requests that the generator be shipped to Company C’s location in Florida. Since the title to the equipment passes to Company C at Company B’s location, no tax is due on any separately stated transportation charge.

(b) Example: Company X is in the business of selling widgets at retail. Company X’s customers may order the widgets to be shipped F.O.B. origin or F.O.B. destination. Customer Z places his order for a dozen widgets of various sizes to be shipped F.O.B. destination to his business location in Florida. Since Customer Z could have requested the widgets to be shipped F.O.B. origin or destination, the separately stated transportation charge is not considered a part of the sales price of the widgets and is not subject to tax.

(6) When the purchaser of taxable tangible personal property contracts with a third party carrier at the purchaser’s option and pays transportation charges thereon directly to the third party carrier, such transportation charges are not subject to tax.

Rulemaking Authority 212.17(6), 212.18(2), 213.06(1) FS. Law Implemented 212.02(4), (15), (16), (19), 212.06(1), 672.319, 672.401 FS. History–New 10-7-68, Amended 6-16-72, 7-3-79, Formerly 12A-1.45, Amended 10-17-94.