Sales Tax Implications for the Transportation Industry

Feb 14, 2022Transportation

The transport of people and products often has varying considerations when it comes to state sales tax implications. Sales tax is assessed on some items, but not others. The summary outlined below covers some of the more typical items in general commerce involving the transportation industry.

Transportation Sales Tax Considerations

Passenger Transportation Services

Companies performing services within the transportation industry are afforded a number of tax-favorable benefits. One of which is a specific exemption related to passenger transportation. Passenger transportation services transport people to places. Under Minnesota Statutes 297B.03 and 297A.90, fees charged to transport passengers are not taxable for Minnesota sales tax purposes.

A person who is engaged in for-hire transportation of passengers by motor vehicle may register as a retailer, however, an exemption is available that limits their potential sales tax exposure.

Examples of exemptions for passenger transportation include the following:

  • Aircraft
  • Bus
  • Ferry
  • Light rail
  • Limousine
  • Taxicab and rideshare services
  • Train

Parking & Transportation Services

When parking and transportation services are sold together for one combined fee, the entire sale is subject to sales tax even though the transportation by itself is a nontaxable service. When sold together, the transportation service is taxable because it is necessary to complete the sale of the parking service.

Common Carrier Services

Common carriers are hired to transport goods from point A to point B. The fees charged to provide these services are generally not taxable. Common carriers often transport goods by air, ship, tractor-trailer, train, and/or truck. However, the transport of aggregate materials (i.e. gravel, concrete, asphalt, etc.) may still have sales tax consequences.

Delivery Charges

Delivery charges are charged by the seller for preparation and delivery of personal property or services to a location designated by the purchaser, including, but not limited to, transportation, shipping, postage, handling, crating, and packing.

If the item being sold is taxable, charges by the seller to deliver it would also be taxable. Delivery charges are part of the sale price of the item, even if separately stated. Delivery services furnished and billed by a third party are not taxable except when delivering aggregate materials or concrete blocks. 

Transportation has been a key practice area of Smith Schafer’s for more than 50 years. For more information on tax strategies that may benefit your transportation business, contact the Smith Schafer Transportation Team. We look forward to speaking with you soon.

 

Blank

Your content goes here. Edit or remove this text inline or in the module Content settings. You can also style every aspect of this content in the module Design settings and even apply custom CSS to this text in the module Advanced settings.

Trending Posts

Subscribe to our Blog

Related Industry Posts

7 Key Transportation Company Budgeting Tips

7 Key Transportation Company Budgeting Tips

Using a budget is crucial in driving your transportation company’s financial future, but many businesses wonder how to get started. According to IBISWorld reports, one of the top success factors for a transportation company is adequate cost controls and budgeting.

read more

Subscribe to our blog

SEND US A MESSAGE

We appreciate your interest in Smith Schafer and would love to hear from you.So please complete this form or feel free to email us directly at: [email protected]