Connecticut Sales Tax Guide
Chapter 8: Understanding Connecticut sales tax rules for shipping & handling
Filing sales tax returns in Connecticut is straight-forward compared to states like Colorado. Why should sales tax on shipping in Connecticut be any different? It isn’t. If you’re lucky enough to be shipping taxable orders into Connecticut, the rules for collecting sales tax on shipping and handling are pretty cut and dried. Follow a few simple rules and compliance is a breeze.Is Shipping Taxable in Connecticut?
In a word: yes. If you have nexus in Connecticut, you should charge sales taxes on all your shipping and handling charges. This applies even if you break shipping out onto a separate line on your invoices and even if you charge your customers exactly what it costs you to ship their order.
This rule applies across the board, so if you offer personal delivery and charge your customers for that service, that delivery charge is also taxable.The Exception to the Rule: Tax-Exempt Purchases
If you ship a tax-exempt order, the shipping and handling are exempt from sales taxes as well.
If your shipment contains a mixture of taxable and tax exempt goods, Connecticut wants you to be very precise in how you calculate the amount of shipping that’s taxable. Where other states let you choose to allocate a percentage of shipping either by weight or by amount charged, Connecticut takes it a step further. The state wants you to use the same method to divide the taxable from the tax-exempt shipping that you used to calculate shipping in the first place.
Thus, if you charge for delivery by the pound, you need to weigh the tax exempt and taxable parts of the order separately and portion out the tax-exempt and taxable shipping costs accordingly. If you charge for shipping based on the value of the order, then you must allocate the nontaxable and taxable portions of the freight in proportion to the dollar value of goods in each of these categories.
If this all makes your head spin, the Connecticut Department of Revenue Service can help. A department representative points sellers to page 26 of their Getting Started in Business publication for some handy examples that demonstrate different ways to calculate the proportion of your freight charges subject to sales tax when you mix taxable and tax exempt goods.Connecticut: Short and Sweet
The rules governing sales taxes on shipping in Connecticut are simple and straightforward: charge sales tax on shipping and handling if the order is taxable and don’t if it’s tax-exempt. Be grateful for a state whose rules about sales tax on shipping are this clear; some states have laws on this issue so convoluted it could make you cry (we’re looking at you, Illinois!). If you use Amazon FBA or have nexus in multiple states for another reason, you might find that sales tax automation software helps you keep up with the complexity of state rules and regulations governing sales taxes.