Vermont Sales Tax Guide
Chapter 8: Understanding Vermont sales tax rules for shipping & handling
Many business owners who sell products online charge their customers for the shipping and delivery of those products, and that’s why it’s important to understand the sales tax laws associated with the transactions. If you’re an ecommerce seller who is located in Vermont, or you have nexus in the state, here’s what you need to know about taxing your shipping and delivery charges.
Is Shipping Taxable in Vermont?
In short: yes. According to the Vermont Department of Taxes, sellers should consider delivery charges to be a part of the taxable sales price. To clarify the issue, the state’s website says, “Even where stated as a charge separate from the charge for the property or service, the sales price includes charges for labor to create the product sold, charges for services necessary to complete the sale, and delivery charges.” So, basically, you’ve got to charge tax on shipping and handling.
Delivery Method Doesn’t Matter
Vermont 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.” In other words, if you charge customers to transport your products in any way — whether through the mail or in your own truck — you should charge sales tax on that charge.
What About Tax-Exempt Products?
Sometimes you will need to send both taxable and exempt products to customers in the same package, and in such cases, the rules change a little. For example, if you ship a combination of groceries, which are exempt, and cosmetics, which are taxable, the Department of Tax rule requires you to figure out what percentage of the package is made up of cosmetics — using either in sales price or weight for the calculations — and then to tax that same percentage of the delivery charge. If you don’t prorate the delivery charge to account for the tax-exempt items in the package, the entire delivery charge is subject to sales tax.
Are Local Laws Different?
Local tax rates in Vermont are applied based on a nine-digit zip code, and the state allows sellers to apply the lowest combined state and local option if the area has more than one tax rate. But according to the Vermont Department of Taxation, the differences in taxes only occur for meals and lodging. Sellers will always use the state laws to determine the taxability of shipping and delivery charges.
When we asked the representative for advice for sellers who are required to charge sales tax in the state, they said, “The most important thing to remember is that even if the delivery charge is separately stated, it’s still taxable.”