FET on delivery charges

Originally published in the June 2016 edition of Tech Trends (e-newsletter and as an article within NTEA News), this article is also available to you below as an employee of an NTEA member company.

Members inquire about federal excise tax (FET) as related to transportation charges. Solutions are typically fact-specific. In general, transportation and delivery charges of taxable articles (truck and trailer bodies and/or chassis and tractors) related to placing an article in ready-for-use condition are included in the taxable price.

Helpful info
  • Transportation costs from the manufacturer to the retail seller are generally not excludable from the taxable price of the article. Therefore, when the manufacturer drop-ships a customer-ordered article to the seller, those costs are usually taxable.
  • Typically, transportation costs from the retail seller to the customer may be excluded from the taxable price. Therefore, charges for delivering a customer-ordered article from the retail place of business to the customer’s location are generally not taxable.
  • For direct delivery from the manufacturer to the customer, only the amount exceeding what it would have cost for the manufacturer to drop-ship the article to the retail seller’s place of business may be treated as nontaxable. 
Are you faced with technical or engineering challenges?
Contact the Technical and Engineering Hotline at 800-441-6832 for individual attention on varied topics such as Federal Excise Tax, truck certification and labeling, vehicle compliance and truck spec’ing. The Hotline is available Monday-Friday, 8AM-5PM (EST). Members can contact the Association as frequently as needed.