Nebraska Sales Tax Guide
Chapter 8: Understanding Nebraska sales tax rules for shipping & handling
Nebraska’s state sales tax is low when compared to other states, with a rate of only 5.5 percent. In some areas local taxes can increase that rate to 7 percent, but the state exempts items like food and prescription medications.
Online sales thrive in the state, which has a booming economy. The state boasts the lowest unemployment rate in the nation, making it an ideal target for online businesses. But before your start marketing your online offerings to Nebraska residents, it’s important to know the state’s laws as they apply to sales tax on shipping, handling, and delivery.Is Shipping Taxable in Nebraska?
Like most states (and most everything in the world of sales and use tax), the answer is…it depends. There are a number of factors that impact whether the Nebraska Department of Revenue will require you to collect sales tax on shipping and handling. We’ll outline some of those situations below. As is always the case, specific questions on shipping in Nebraska and sales tax should be taken directly to a tax professional familiar with Nebraska tax laws.Does Method of Delivery Matter?
In Nebraska, the method of delivery is highly significant when it comes to determining whether sales tax must be charged on that portion of the transaction. If the items being purchased are taxable and the buyer pays the delivery charge directly to the retailer, sales tax must be paid on the item. In Nebraska, delivery charges include the cost of freight, transportation, postage, handling, crating, and packaging.
However, if the business pays either the United States Postal Service or a freight company for the delivery, sales tax does not need to be paid on the delivery portion of the purchase. That delivery charge must be separately stated on the receipt to be exempt. If the items being shipped are tax-exempt, the business isn’t required to charge sales tax on the delivery portion of the order, either.Out-of-State Businesses
As in many states, Nebraska requires businesses with a presence in the state — or nexus — to register and pay sales tax. Businesses are considered to have nexus in the state if they maintain or occupy an office in Nebraska, have a representative acting on their behalf in the state, or are owned or controlled by a business that has a retailer located in the state.
For out-of-state businesses that don’t have a presence in Nebraska, a permit is not required. However, businesses may charge sales tax to any Nebraska purchasers as a convenience. If this tax is not charged at the time of purchase, Nebraska residents are expected to track the amount and pay it as a use tax when they file each year.Words of Caution
When asked if there are any issues the state deals with most frequently, the Department of Revenue’s spokesman emphasized that delivery charges are taxable. “Except for separately stated charges for U.S. postage on direct mail, these charges are taxable whenever the item is taxable and the charges for such items are paid to the retailer of the item,” the department’s posted FAQ says.
Nebraska businesses that ship through a third-party company or the postal service don’t have to pay sales tax on shipping charges. To meet state requirements, however, those charges must be stated separately on the invoice. If a business delivers goods to the customer itself, the cost of getting the items to the customer must be taxed at the current local rate.