• Subject: Re: Taxable Freight?
  • From: Kent Van Horn <lkvanhorn@xxxxxxxxxx>
  • Date: Thu, 8 Feb 2001 20:57:37 GMT

Devin,

I spent 5 years as a Sales/Use tax Auditor.  

Many states are now taxing freight that is not paid directly to a 
Common or Contract Carrier.

The argument is that it is part of the cost of the product and that 
listing it as a separate item on the invoice is no different than 
separating out the cost of labor or material.  The total invoice 
amount is the total cost to the customer and therefore the Total 
Taxable Amount.

You can agree or disagree, but so far it has held up in the tax 
courts.  The only way around it is to have the customer pay the 
Common or Contract Carrier directly.

Good Luck.

Kent Van Horn

> v6.1.00 AS/400 CS - Basically Vanilla
> 
> One of our largest customers (a multi-national supermarket chain)
recentl> y started remitting amounts in excess of the amounts we were 
invoicing
th> em.  When asked why their payment amounts did not match our 
invoice
amoun> ts, the customer replied that it was because we were not 
charging them
ta> x on freight to certain states (WA is one).  This was news to me -
 I had
> never heard of freight being taxed in the US.  They are now 
complaining
t> hat our invoices are not correct and they want us to include taxes 
on
fre> ight so they can just pay invoice amounts (w/out calculating the 
amount
a> nd remitting more than the invoice amount).
> 
> We currently do not use OLM and just use the freight bucket on the 
order
> header to charge freight.  We've used special charge lines for 
freight
in>  the past (and these could have a tax code in them to result in 
freight
a> mounts being taxed), but this is less desirable.  The standard 
invoice
sh> ows freight after the subtotal if it is placed in the header 
(what this
s> ame cutomer says they want), but it shows before the subtotal like
regula> r product lines if placed on as a special charge line (not 
wanted). 
Also> , adjusting the $ amount on a line item (amount is not known 
until time
o> f shipment) in invoice release is a pain since the line could be # 
100
(p> age down . . . page down . . . page down . . .) so a header 
freight
amoun> t is easier in this respect as well.
> 
> We're trying to avoid OLM (not even sure it handles this) a mod to 
the
in> voice program or other BPCS programs and have this requirement 
handled
"a> utomatically" in BPCS (if it is a requirement).  Has anyone else 
had to
d> eal with this "tax requirement"?  SSA Helpline hadn't heard of 
this as a
> requirement or had other clients asking about how to handle it.   
> 
> If you have to deal with this, how are you handling it in BPCS?
> 
> 
> Thanks,
> 
> Devin<br clear=all><hr>Get your FREE download of MSN Explorer at <a
hre> f="http://explorer.msn.com">http://explorer.msn.com</a><br></p>
> 


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