Is Shipping Taxable in Alabama?

By January 6, 2019 Alabama Sales Tax

Is Shipping Taxable in Alabama?

Before we begin, let’s define the term “common carrier,” and “gross receipt.” A common carrier is defined as a commonly accepted method of shipping to the likeness of UPS, USPS, and DHL. Gross receipt, is the total of the merchandise, shipping, and any and all other costs on the final bill.

If you ship packages by way of a common carrier, your gross receipt is not taxable as long as you have segregated the cost of shipping from the other merchandise. If your company delivers the good itself, then, the gross receipt will be taxable.

Shipping Tax Exempt Purchases

If you are selling things related to farming (these are sales tax exempt) or building ships, trains, or aircraft, your goods may be tax exempt. If you sell tax-exempt goods or your sales are to an entity exempt from tax (including local governments and charities), any shipping and handling you charge to your customer may also be tax exempt. This does not require the segregation of shipping charges.
Again, shipping costs must be segregated on the final bill. You will hear television infomercials telling you that there is one charge for shipping and handling. As a seller, shipping and handling must be segregated on the final bill. If you add a handling charge to your orders, you should bill for it separately and charge sales tax on that amount. When passing off freight charges for items shipped to you for your customers, you have to add sales tax to the cost of the freight charge that you are passing off.

Is Shipping Taxable in Alabama?

Ansari Law Firm

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