Perhaps the only drawback of purchasing clothing online is the need to schlep it to the post office when you don’t like how it fits or looks. An “easy return label” makes that process much simpler.
One retailer that does business in Virginia charged customers a flat fee if they used the easy return label provided with their purchases. Separately, it credited the account the sales price of the returned merchandise, along with the sales tax collected on the returned merchandise.
During an audit, the seller was found liable for sales tax on the easy return label fees. The seller hadn’t taxed the fees because they represented the postage cost to return the merchandise to the seller, and Virginia law provides an exception for separately stated transportation charges (Virginia Code § 58.1-609.5 3).
According to the Tax Commissioner, however, Virginia Administrative Code (VAC) 10-210-6000 (B) specifies that transportation and delivery charges are “charges for delivery from the seller to the purchaser.” The exemption doesn’t extend to transportation and delivery charges from a purchaser to a seller, or from a manufacturer to a retailer for resale. [Emphasis mine.]
Too bad that isn’t spelled out in Virginia Code § 58.1-609.5 3.
Furthermore, while it’s true separately stated shipping and handling fees are generally exempt in Virginia, the Tax Commissioner noted that any tax due to a dealer in the event purchases are returned “shall not … include the tax paid upon any cash retained by the dealer after such return of merchandise.” Since the seller retained fees for the easy return label, those charges “are subject to the tax.”
