Can a sales tax be added to a delivery charge

by Loella Haskew, CPA

I deliver pizza. The owner charges sales tax on a delivery charge of $2.49, of which only $1.60 goes to the driver. Is the sales tax charge appropriate?

California sales tax rules say that if a seller has a fixed fee for the delivery of goods delivered to the ultimate customer, the seller must charge tax on the entire amount unless the seller can document that the fee is exactly the cost to make the delivery. From your question, it looks to me like the pizza storeowner charges a flat fee for every delivery. The fee is probably designed to cover a reimbursement to you for your average fuel and other travel costs and your identified tip of $1.60. It is, therefore, proper for the owner to charge sales tax on the total delivery charge.

The good news is that any tip the consumer voluntarily gives to you is not subject to sales tax. Wouldn’t it be awful if, in addition to reporting that tip for income tax purposes, you had to charge the consumer sales tax, too? It would make the job very complicated.

Loella Haskew is a Walnut Creek, Calif., CPA with the firm of Buckley Patchen Riemann & Hall. You can reach her at (925) 937-2727(925) 937-2727.

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