Skip to main content
Avalara Help Center

How does SalesTaxII handle freight?

Overview

You wish SalesTaxII to handle your freight transactions.

 

 

Environment

SalesTaxII

Resolution

A ‘CALLing’ program must pass ‘FRGHT’ in the ‘Exempt Product Code’ parameter (Parameter PEXMP)
when passing a freight line item amount to SalesTaxII. The user can populate our exemption file with
exemption codes for the states listed below by selecting the appropriate menu item from the SalesTaxII
main menu.

 

The following states generally exempt freight from sales and/or use tax:

 

• Alabama
• Arizona
• California
• Delaware (no sales tax)
• Idaho
• Illinois
• Iowa
• Louisiana
• Maryland
• Montana (no sales tax)
• New Hampshire (no sales tax)
• New Jersey
• Oklahoma
• Oregon (no sales tax)
• Wyoming
• Virginia

 

States not listed above generally do tax freight.

 

NOTE: Your own company’s particular product, shipping method (your vehicle or public transportation), and
other factors can influence taxability of freight. In some instances, states that normally tax freight will
exempt freight from sales and/or use tax. If you find that your company and its method of shipment are
not taxable in any or all of the above states, add the affected states to our exemption file (file TAXID)

 

To have the best chance of avoiding sales and/or use tax on transportation (freight) charges:
• Ship by common or independent carrier.
• Ship FOB origin.
• Title pass at shipping point.
• Separate freight charges from other charges on the invoice.

 

NOTE: In many states, if a handling fee or other markup is included in the freight charge, freight becomes
taxable.

  • Was this article helpful?