Oklahoma Sales Tax Guide
Chapter 8: Understanding Oklahoma sales tax rules for shipping & handling
Oklahoma is rare in its approach to taxability on shipping and delivery charges in that it wrote its laws in a way that basically leaves it up to the seller. If you run an ecommerce store from Oklahoma, or have sales tax nexus in the state, here’s what you need to know about collecting sales tax on shipping and delivery charges.
Is Shipping Taxable in Oklahoma?
The Oklahoma Tax Commission defines delivery charges as “charges by the seller of personal property or services for preparation and delivery to a location designated by the purchaser of personal property or services including, but not limited to, transportation, shipping, postage, handling, crating, and packing.”
As a seller, if you include a delivery charge as part of the price of your products, you must charge the purchaser sales tax on the charge. On the other hand, if you separately state the delivery charge on an invoice, the charge is not subject to sales tax. That means as a seller, you have the choice whether or not charge your customers sales tax by how you choose to invoice them.
The statute also says charges for the delivery of direct mail are not included in the definition of delivery charges as long as they’re separately stated on the invoice. In other words, if your business purchases direct mail advertising services, and you provide the seller with a direct pay permit, you will not have to pay sales tax to the seller.
Impact of Delivery Methods
According to the Oklahoma Tax Commission, the method of delivery will not impact whether or not you should charge sales tax. In other words, if you state the charge separately, no matter what form of transportation you use, those charges are not subject to sales tax. Likewise, if you include the charge in the price of the product, no matter how it’s delivered, you should charge sales tax.
Shipping Tax Exempt Purchases
Oklahoma makes it even easier to understand their taxability of shipping charges when it comes to taxable and exempt products. According to its Tax Commission, the sales tax exemption that comes from stating the charge separately on an invoice, “applies to all sales, taxable and non-taxable.”
According to Paula Ross, Communications Director at the Oklahoma Tax Commission, there are no instances where the state and local jurisdictions differ when it comes to sales tax on shipping and handling. “They are the same,” she says.
Finally, Ross says that the most common mistake she sees with shipping and handling and sales tax is that sellers tax the consumer even when the charge is listed separately. Remember, if the charge is listed separately from the price of the product, you do not have to charge sales tax.