Shipping charges in California are subject to sales tax under specific conditions:

1. Taxable Sale: If a sale is taxable, then shipping charges may also be taxable, depending on how they are stated on the invoice.

2. Separately Stated Shipping Charges: If shipping charges are separately stated from the price of the item on the invoice, they are generally not taxable.

3. Included Shipping Charges: If shipping charges are included in the lump-sum price of the item or if there is no separate statement, the entire amount, including shipping, is taxable.

4. Delivery Method: Shipping charges for delivery directly from the retailer to the purchaser are generally not taxable if separately stated. However, if the delivery involves the retailer’s own vehicles, the shipping charge typically becomes part of the sale price and is therefore taxed.

5. Combined Charges: If handling and shipping charges are combined into one item on the invoice, the entire amount may be taxable, even if the actual shipping would have been non-taxable when separately stated.

6. Non-Taxable Sales: For non-taxable sales, such as sales of exempt items or sales for resale, shipping charges are not subject to sales tax, regardless of how they are stated.

Invoicing Recommendations:

• Separate Shipping Charges: Clearly separate shipping charges from the item price on invoices to ensure they are not taxed.

• Accurate Invoicing: If shipping is included in the item price, ensure that it is properly categorized as part of the taxable sale.

• Use Accounting Software: Implement software that can correctly categorize and apply tax rules to shipping charges based on their invoicing.

• Review Local Regulations: Stay informed about specific local tax regulations that may affect shipping charge taxability.

• Maintain Records: Keep detailed records of how shipping charges are invoiced to support compliance and defend against audits.

By accurately invoicing shipping charges and adhering to these conditions, businesses can remain compliant with California’s sales tax laws and avoid potential errors in tax collection and remittance.