1965 Ordinances - Laserfiche WebLink

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If ~ue seller contracts to deliver tangible personal property to some designated place, or is obligated under the contract to pay trans- portation charges to some designated place, the transportation services are rendered to %he 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 Ordinance. On ~he other hand, if the seller contracts to sell tangible personal property f.o.b, origin, the title to the property passing at such point to the buyer and the buyer pays the trans- portation 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 com- puting his liability under the Ordinance. These principles will apply irrespective of whether such charges are billed by ~]e seller separately from the tangible personal property sold. For exmmple, where an automobile dealer sells an automobile from his stock, and title thereto passes to the purchaser for use or consumption at the place of business of such dealer, the dealer is not permitted to deduct freight charges incurred in bringing the automobile from the factory to his place of business notwithstanding that the automobile may be sold and billed to the consumer on a basis of factory list price plus freight and other charges. Likewise, a person engaged in the business of selling lumber for use or consumption may not, in computing his tax, deduct from the selling price of lumber, freight or delivery charges accruing on account of the trans- portation of the lumber from the forest to his yard or warehouse, or from his yard or warehouse to the consumer, if under the contract of sale he is obligated to deliver the lumber to the residence or place of business of the consumer. This is true notwithstanding that such items may be separately set up in his billings to the consumer. In all cases the determining factor is the place where title to tangible personal p~operty passes to the user or consumer, and any freight, delivery or other transportation charges incurred and paid by the seller for the purpose of transporting such property to such place are a part of the selling price of such property. Where property is sold on terms whereunder the seller agrees to deliver such property to a certain place, but the purchaser pays the freight in the first instance and deducts it from the seller's invoice price of the goods in making remittance to the ~eller for the goods, the transportation charges are deemed to be a part of the selling price of the tangible per- sonal property and the seller will be liable for tax with respect to the amount thereof. When property is sold on terms whereunder the title passes to the buyer at the place of sA'~ but it is impossible to ship f.o.b, origin because of railroad refusing to take f.o.b, shipments to the point of consignation, the seller may pay the freight charges for the buyer and bill him therefor separately provided the goods are shipped as the property of the vendee, and in such case the transportation charges shall not be considered as a part of the sales price for sales tax purposes. - 25 -