June 6, 1985

Your customer ordered a machine part from you. You purchased same from the manufacturer for resale to your customer. The manufacturer sent the part to you and billed you for the part as well as for the freight charge. You then sold the part to your customer at retail.

You ask whether the sales tax on your retail sale of the part to your customer applies to the freight charge billed to you by the manufacturer.

Under Massachusetts General Laws Chapter 64H, Section 1(14)(a)(iii), the sales price of an item for the purpose of application of the sales tax includes "the cost of transportation of the property prior to its sale at retail." But see G.L. c. 64H, § 1(14)(c)(v), Letter Ruling 83-68 (transportation charges separately stated, if the transportation occurs after the sale of the property is made, is excluded from the sales price).

Since the freight charge was incurred prior to the sale of the part at retail to your customer, the sales tax applies to the freight charge as well as to the cost of the part.

Very truly yours,

/s/Ira A. Jackson
Commissioner of Revenue
IAJ:HW:n
LR 85-56