Nevada Sales Tax Guide
Chapter 8: Understanding Nevada sales tax rules for shipping & handling
While many think of Las Vegas when they talk about Nevada, the state also includes lots of desert, Lake Tahoe, and two other major cities. However, Las Vegas is the biggest draw, and with so many tourists pouring into the state, it’s no surprise that the state has a fairly high sales tax.
Nevada state sales tax is 6.85 percent, but some local municipalities add their own local tax to that amount, forcing the rate up as high as 8.1 percent in some cities. For businesses, calculating sales tax can sometimes be complicated due to these diverse rates, especially when it comes to determining whether sales tax needs to be charged on shipping and handling.Is Shipping Taxable in Nevada?
Since May 2009, businesses that sell items to Nevada residents do not need to pay sales tax on freight, transportation, or delivery on items sold to customers in the state. The charges must be separately stated on the invoice to qualify for the tax exemption. However, handling is still taxable in the state, even if it is separately stated. This includes the cost of packaging or crating an item for delivery to customers.
Businesses must pay tax on the charge for shipping an item if that shipping takes place before the item’s ownership has transferred to the customer. This is charged either by bundling the cost with the price of the merchandise or as a pass-through freight charge stated separately from the cost of the goods on the invoice.Out-of-State Sales
Like many states, Nevada does not require out-of-state sellers to pay sales tax on purchases made by Nevada customers as long as that business does not have a presence in the state. Nevada defines a business as having nexus if it is part of a group of businesses that has a presence in the state, does business under a similar name in the state, maintains an office or other physical location in Nevada, or conducts any other activities in Nevada that allow it to maintain a market in Nevada for its products or services.
If a non-Nevada business does have a presence in the state, it is subject to the same taxation rules as businesses with headquarters in the state. This means paying sales tax in accordance with state laws.Advice from Nevada
When asked if there are common issues that arise related to sales tax on shipping and handling in the state, Jay Kvam, deputy executive director of administrative services for the Nevada Department of Taxation, pointed to a recently issued bulletin. While the state exempts transportation, shipping, and postage charges that are stated separately on the invoice, this doesn’t apply to some delivery charges.
“If the separately stated ‘delivery charge’ includes any of the following components, the delivery charge is taxable: handling, crating, preparing for mailing or delivery and packaging,” the bulletin states. “Even if a retailer chooses to separately state those charges, they are necessary to complete the sale. Handling charges are also taxable if they include preparation, assembly, or packaging charges.”
To keep shipping and delivery charges tax-free, Nevada businesses should first ensure they are separately stated. Even then, they must not include taxable items like handling or packaging. In Nevada, those items are considered part of the purchase and disallowed as exemptions.