Is Shipping Taxable in Pennsylvania? Pennsylvania Sales Tax Rules for Delivery and Postage Charges

Is Shipping Taxable in Pennsylvania?

In Pennsylvania, separately stated delivery charges billed by the vendor in connection with a taxable transaction are generally subject to sales tax. This has applied since March 4, 1971.

Pennsylvania also states that if a vendor delivers a taxable item to a Pennsylvania vendee through the mail, the vendor’s charges for both the taxable item and the postage fee are subject to tax, even if separately stated on the invoice.

Source: Pennsylvania Code, § 54.1 Delivery charges https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/061/chapter54/s54.1.html&d=reduce

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General Rule: Vendor-Billed Delivery Charges Are Taxable for Taxable Transactions

Pennsylvania generally taxes delivery charges when they are billed by the vendor in connection with a taxable transaction.

For example:

Product price: USD 100 Delivery charge billed by vendor: USD 8 Taxable amount: USD 108

If the product is taxable, Pennsylvania sales tax generally applies to the full USD 108 amount.

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Does Separately Stating Delivery Make It Non-Taxable?

No. Pennsylvania specifically provides that separately stated delivery charges billed by the vendor in connection with a taxable transaction are subject to tax.

For example:

Product price: USD 100 Shipping charge: USD 8 Total: USD 108

If the shipping charge is billed by the vendor and connected with a taxable sale, the USD 8 charge is generally taxable even if separately stated.

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Postage Fees Can Also Be Taxable

Pennsylvania’s rule specifically addresses postage fees. If a vendor delivers a taxable item through the mail and charges the customer for postage, both the taxable item and the postage fee are subject to tax, even if stated separately.

For example:

Product price: USD 100 Postage fee billed by vendor: USD 8 Taxable amount: USD 108

If the product is taxable, the postage fee is generally taxable as well.

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When Are Delivery Charges Not Taxable in Pennsylvania?

1. Nontaxable transactions

Delivery charges made in connection with nontaxable transactions are not subject to tax. This includes delivery charges for items purchased for resale or items excluded from tax.

Examples may include:

• purchases for resale;
• items excluded from tax;
• qualifying exempt transactions;
• transactions supported by valid resale or exemption documentation.

For example:

Resale purchase price: USD 100 Delivery charge: USD 8 Total: USD 108

If the transaction is properly treated as resale, the related delivery charge is generally not taxable.

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2. Delivery made and billed by someone other than the vendor

Charges for delivery made by someone other than the vendor and billed by someone other than the vendor are not subject to tax.

For example:

Product price paid to vendor: USD 100 Delivery charge paid directly to third-party carrier: USD 8

If the delivery charge is made and billed by a third party, not the vendor, it is generally not subject to Pennsylvania sales tax.

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Vendor-Billed vs. Third-Party-Billed Delivery

The key Pennsylvania distinction is who bills the delivery charge.

Example 1: Vendor-billed delivery

Product price: USD 100 Delivery charge billed by vendor: USD 8 Taxable amount: USD 108

The USD 8 delivery charge is generally taxable if the product is taxable.

Example 2: Third-party-billed delivery

Product price paid to vendor: USD 100 Delivery charge paid directly to third-party carrier: USD 8

The delivery charge is generally not taxable if it is made and billed by someone other than the vendor.

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Common Compliance Issues for Ecommerce Sellers

Assuming separately stated delivery is exempt

In Pennsylvania, separately stated vendor-billed delivery charges remain taxable when connected with a taxable transaction.

Ignoring postage fees

Postage charged by the vendor for mailing taxable items is generally taxable.

Confusing vendor-billed and third-party-billed delivery

Vendor-billed delivery charges are generally taxable for taxable sales. Delivery made and billed by a third party is generally not taxable.

Not documenting nontaxable transactions

If the underlying transaction is resale or otherwise nontaxable, sellers should retain proper documentation.

Applying another state’s rule to Pennsylvania

Shipping taxability varies by state. Pennsylvania should be configured separately from states where separately stated shipping is generally non-taxable.

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Practical Tips for Sellers Shipping to Pennsylvania

Sellers shipping taxable goods to Pennsylvania customers should generally include vendor-billed delivery, shipping, and postage charges in the taxable amount. This applies even if the charges are separately stated on the invoice.

Sellers should also distinguish vendor-billed delivery from delivery billed directly by a third party. For resale or exempt transactions, sellers should retain resale certificates, exemption certificates, invoices, order details, carrier records, and sales tax filing records.

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Conclusion

In Pennsylvania, separately stated delivery charges billed by the vendor in connection with taxable transactions are generally taxable. Vendor-charged postage fees for taxable items are also taxable even when separately stated.

Delivery charges connected with nontaxable transactions are not taxable. Delivery charges made and billed by someone other than the vendor are also not subject to tax. For ecommerce sellers, Pennsylvania shipping taxability depends on whether the transaction is taxable and whether the delivery charge is billed by the vendor.

Source: Pennsylvania Code, § 54.1 Delivery charges https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/061/chapter54/s54.1.html&d=reduce