Handling Charges Taxable in Virginia

Monday, June 4th, 2018

 
 
Virginia state capital building.
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Virginia
General

The Virginia Tax Commissioner recently addressed the taxability of handling charges. The taxpayer was a custom homebuilder whose purchases of tangible personal property included shipping and handling charges.

Virginia taxes sales of tangible personal property. Tax applies to handling charges, but it does not apply to separately stated shipping charges. Combined charges for "shipping and handling" are taxable unless documentation is provided showing that the charges are for shipping only. The ruling determined that the charges were taxable, but it granted the taxpayer 45 days to provide proof that the charges were for shipping only.

The ruling also provided the taxpayer the opportunity to submit further evidence regarding purchases the taxpayer claimed were for construction services. Virginia does not generally require contractors to charge tax on tangible personal property. Instead, contractors are responsible for paying tax on the materials they use. Thus, the taxpayer will not owe tax if it shows that the purchases were for construction services rather than tangible personal property.

https://www.tax.virginia.gov/laws-rules-decisions/rulings-tax-commissioner/18-81


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