IN Sales Tax 101 Shipping States

Is Shipping in Indiana Taxable?

by Mark Faggiano

Shipping Taxability Indiana

You’ve just sold some items through your online store in the state of Indiana. While you know you have sales tax nexus there and need to charge sales tax on the products you’ve sold, you’re not sure if the charges you add on for shipping and handling are taxable.

To help you out, we took a look at state regulations regarding collecting sales tax on shipping in Indiana. While it’s mostly straightforward, there are a few things that separate it from other states. Make sure to take these differences into consideration to comply with local laws.

Sales Tax on Shipping in Indiana Has Changed

If you sold items in Indiana before July 1, 2013, you were likely required to charge sales tax on almost all shipping charges. As a result you may think the rules still dictate sales tax is included on transportation, handling, and other shipping costs.

However, on July 1, 2013, some things changed. New rules say that transportation, shipping, crating, handling, packing and postage charges that are separately stated on the invoice are NOT taxable in some circumstances (keep reading!). Charges that are not separately stated on the invoice are, however, still taxable.

Also, if you deliver your goods via the USPS then delivery charges are not taxable. But if you use a private carrier like FedEx, UPS, etc. then shipping charges are taxable. Confused yet?

Here’s what the Indiana Department of Revenue has to say:

Indiana shipping

Summary of Sales Tax on Shipping in Indiana

Basically, if you use the US mail service to ship your items, you should be fine as long as you state the shipping charges separately on the invoice. If you use a third party service, which includes UPS, FedEx, etc. or delivered items yourself, you are most likely required to charge sales tax on shipping charges. Also if you don’t separately state the charges on the invoice, you’re going to have to collect and remit sales tax to the state.

Have questions or comments about taxable shipping in Indiana? Leave a comment below and start the discussion!

  • Susan

    I do not believe your article is correct. Commissioner’s Directive #23 issued by the Indiana Department of Revenue on July 1, 2013 refers to postage charges for items delivered through the US Postal System. FedEx and UPS have nothing to do with the US Postal System. These are private carriers.

    • Hi Susan,

      We were unsure of that definition, too, so we called Indiana to double check. They consider UPS, FedEx, etc. common carriers and thus if separately stated on the invoice, shipping charges for shipping via these carriers are not taxable. I hope this helps clarify! You can also double check with the Indiana Department of Revenue and get straight to a human by following the directions in this post: http://taxjar.wpengine.com/state-sales-tax-phone-numbers/

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  • Melissa Ditalo

    Sorry, I am confused….If Amazon handles and ships our products to Indiana, would I have to collect tax on that?

    • Hi Melissa,

      If you sell on FBA, you are the seller of record and not Amazon. I hope that helps!

  • Shane Lewis

    FEDEX and UPS charges are delivery charges and are therefore subject to tax, regardless of whether they are separately stated on an invoice, as they do not constitute “postage charges” per IC 6-2.5-1-7.5. Further information can be found in Commissioner’s Directive #23.

    Thank you,

    Collin Davis

    Senior Counsel, Tax Policy

    Indiana Department of Revenue

    100 N. Senate Ave. IGCN 248

    Indianapolis, IN 46204

    • Hi Shane/Collin,

      Can you post the link again? It cut off. Thanks!

      • Shane Lewis

        The link was to directive #23, which you already have posted. I copied the email response I received from Collin to correct your interpretation and the previous information you were given.

        Unless it is “postage”, bought through USPS, it is taxed.

        • Thanks so much! I’ll run this by our advisors. Sounds pretty clear cut to me.

          • Actually, this is what the blog post already says. Please let me know if you see anywhere in here that doesn’t gel with that interpretation. Thanks!

          • Shane Lewis

            Actually, your post communicates that tax does not have to be collected if shipped by common carrier like FEDEX or UPS. That is not correct. Only if shipped via USPS (United States Postal Service) does tax not have to be collected.

          • My apologies, but it very clearly states in two places that FedEx/UPS etc. are taxable:

            “However, on July 1, 2013, everything changed. New rules say that transportation, shipping, crating, handling, packing and postage charges that are separately stated on the invoice are NOT taxable. Charges that are not separately stated are, however, still taxable. And if you deliver your goods yourself or by a private carrier (not USPS, FedEx, UPS, etc.) then shipping charges are taxable.”

            “Basically, if you use the US mail service or a common carrier like UPS or FedEx to ship your items, you should be fine as long as you state the shipping charges separately on the invoice. If you use a third party service or delivered items yourself, you are most likely required to charge sales tax on shipping charges. Also if you don’t separately state the charges on the invoice, you’re going to have to collect and remit sales tax to the state.”

            Clearly the post is confusing, so if you’ll point out where the confusion lies I’m happy to change it. Otherwise, I’m befuddled. Thanks for your help on this. We appreciate all comments!

          • Shane Lewis

            No, it clearly states that if you use FedEx or UPS, then shipping is not taxed. Also, reference your Q&A where you stated you called for clarification and told a poster also that FedEx and UPS is not taxable. Using your information caused me some grief. I emailed for clarification because another party was sure I was mistaken. In fact I was.

            “And if you deliver your goods yourself or by a private carrier (not USPS, FedEx, UPS, etc.) then shipping charges are taxable.”

            “Basically, if you use the US mail service or a common carrier like UPS or FedEx to ship your items, you should be fine as long as you state the shipping charges separately on the invoice. If you use a third party service or delivered items yourself, you are most likely required to charge sales tax on shipping charges.”

          • Oh it’s in the summary! That’s all I needed to know. Thanks so much! We did change this post a long time ago due to similar fact checking,but didn’t change the summary. It’s updated now. Thanks for quoting the relevant part. I just wasn’t seeing it in the body of the text.

          • Shane Lewis

            Almost there! See the part that says (Not USPS, FedEx, UPS…)?

  • I think that has it! Please let me know! (And THANKS for all of your help!)

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