Kansas No Longer Taxes Delivery Charges as of July 1, 2023

Following changes to the tax code that were made during the 2022 legislative section, as of July 1, 2023, Kansas no longer imposes sales tax on delivery charges that are separately stated on the invoice, bill of sale, or other documentation given to the purchaser. These changes are found in the state’s definition of the sales price subject to sales tax and will affect both state and local taxes.   “Delivery charges” means 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.  Based on this definition, the inclusion of handling costs in the price for delivery will not taint the taxability of the delivery charge.

Per state guidance, the delivery fee, to be excluded from the tax base, should be:

  • Clearly denominated as charges for delivery, transmission, or transportation
  • Represent the true or reasonable cost of delivery based on the products and services sold
  • Not include the cost of “freight in” or transportation to the seller, fuel surcharges, or charge-back for delivery of returned goods

The decision of how to prepare and issue a billing statement to a customer is up to the retailer.  K.S.A. 79-3602(ll)(1)(D)(ii) does not mandate that delivery charges be separately stated on the invoice, bill of sale, or similar document given to the purchaser.  If delivery charges are not separately stated they will be included in the sales or selling price, and so will be subject to sales tax, but retailers that do not break out delivery fees will not be obligated to do so and, instead, for sales tax purposes will be able to maintain current business practices for the foreseeable future.  The Department of Revenue declines to opine or give advice regarding billing issues that are not directly related to sales tax.

Kansas H.B. 2136 (2022), K.S.A. § 79-3602(ll), Kansas Department of Revenue Notice 23-02, Delivery Fees Charged By A Retailer (June 22, 2023).

Posted on July 31, 2023