Is Shipping Taxable in Ohio? Ohio Sales Tax Rules for Delivery and Shipping Charges
In Ohio, charges imposed by the vendor or seller for preparing and delivering taxable tangible personal property or taxable services to a location designated by the consumer are part of the taxable price. These charges include transportation, shipping, postage, handling, crating, and packing. However, charges paid directly by the customer to a delivery company and not imposed or collected by the seller are generally not subject to sales or use tax. This article explains Ohio shipping sales tax rules for ecommerce sellers.
On this page
- Is Shipping Taxable in Ohio?
- General Rule: Seller-Imposed Delivery Charges Are Taxable
- Does Separately Stating Shipping Make It Non-Taxable?
- What Charges Are Included?
- Exception: Customer Pays the Delivery Company Directly
- Seller-Collected Delivery vs. Customer-Paid Third-Party Delivery
- Common Compliance Issues for Ecommerce Sellers
- Practical Tips for Sellers Shipping to Ohio
- Conclusion
Is Shipping Taxable in Ohio?
In Ohio, charges imposed by the vendor or seller for preparation and delivery of taxable tangible personal property or taxable services to a location designated by the consumer are part of the taxable price. These charges include transportation, shipping, postage, handling, crating, and packing.
However, charges paid by a customer directly to a delivery company, and not imposed or collected by the vendor or seller of the delivered property or service, are not subject to sales or use tax.
Source: Ohio Administrative Code, Rule 5703-9-52 https://codes.ohio.gov/ohio-administrative-code/rule-5703-9-52
General Rule: Seller-Imposed Delivery Charges Are Taxable
Ohio generally includes seller-imposed delivery-related charges in the taxable price when the underlying property or service is taxable.
For example:
Product price: USD 100 Shipping charge: USD 8 Taxable price: USD 108
If the product is taxable and the USD 8 shipping charge is collected by the seller, Ohio sales tax generally applies to the full USD 108 amount.
Does Separately Stating Shipping Make It Non-Taxable?
Generally, no. In Ohio, the key factor is whether the charge is imposed or collected by the vendor or seller and whether it relates to taxable tangible personal property or a taxable service.
For example:
Product price: USD 100 Delivery charge: USD 8 Total: USD 108
If the product or service is taxable and the delivery charge is collected by the seller, the USD 8 charge is generally taxable even if separately stated.
What Charges Are Included?
Ohio’s rule includes charges for:
- transportation;
- shipping;
- postage;
- handling;
- crating;
- packing.
If these charges are imposed by the seller for preparation and delivery to a consumer-designated location, they are generally part of the taxable price when the underlying item or service is taxable.
For example:
Product price: USD 100 Shipping charge: USD 8 Handling charge: USD 3 Packing charge: USD 2 Taxable price: USD 113
If the underlying product is taxable, these charges are generally taxable.
Exception: Customer Pays the Delivery Company Directly
Ohio provides an important exception. Charges paid by the customer to a delivery company are not subject to sales or use tax if they are not imposed or collected by the vendor or seller of the delivered property or service.
For example:
Product price paid to seller: USD 100 Delivery charge paid directly to delivery company: USD 8
If the USD 8 delivery fee is paid directly to the delivery company and is not imposed or collected by the seller, it is generally not subject to Ohio sales or use tax.
Seller-Collected Delivery vs. Customer-Paid Third-Party Delivery
The key Ohio distinction is who imposes or collects the charge.
Example 1: Seller-collected shipping
Product price: USD 100 Shipping charge collected by seller: USD 8 Taxable price: USD 108
If the product is taxable, the shipping charge is generally taxable.
Example 2: Customer-paid third-party delivery
Product price paid to seller: USD 100 Delivery charge paid directly to delivery company: USD 8
If the seller does not impose or collect the delivery charge, the delivery fee is generally not taxable.
Common Compliance Issues for Ecommerce Sellers
Assuming separately stated shipping is exempt
In Ohio, separately stating shipping does not generally make it non-taxable when the charge is imposed or collected by the seller.
Taxing only the product price
If a seller excludes seller-collected shipping or delivery charges from the taxable amount, the seller may under-collect tax.
Ignoring handling, crating, and packing
Ohio includes handling, crating, and packing in delivery-related charges. Sellers should not focus only on shipping.
Confusing seller-collected delivery with direct third-party billing
Seller-collected delivery is generally taxable when connected to taxable sales. Customer-paid direct delivery company charges are generally not taxable.
Applying another state’s rule to Ohio
Shipping taxability varies by state. Ohio should be configured separately from states with different rules.
Practical Tips for Sellers Shipping to Ohio
Sellers shipping taxable products or providing taxable services to Ohio customers should generally include seller-imposed shipping, delivery, postage, handling, crating, and packing charges in the taxable price.
If the customer pays a delivery company directly, sellers should retain records showing that the charge was not imposed or collected by the seller. Sellers should also keep invoices, checkout records, delivery records, fee breakdowns, marketplace reports, and sales tax filing records.
Conclusion
In Ohio, seller-imposed charges for preparation and delivery of taxable tangible personal property or taxable services are generally part of the taxable price. These charges include transportation, shipping, postage, handling, crating, and packing.
Charges paid directly by the customer to a delivery company, and not imposed or collected by the seller, are generally not subject to sales or use tax. For ecommerce sellers, the key takeaway is clear: Ohio shipping taxability depends on whether the charge is seller-imposed and whether the underlying sale is taxable.
Source: Ohio Administrative Code, Rule 5703-9-52 https://codes.ohio.gov/ohio-administrative-code/rule-5703-9-52