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Apparently, in California, shipping on taxable items is not necessarily taxable. ("Handling" is considered a service and is taxable) However, this is subject to the following conditions: You must deliver directly to customer via common or contract carrier or US Mail, invoice must list delivery or shipping charges separately, and charge must not exceed actual cost for delivery to customer.
If the merchant does not keep records that show actual cost of delivery, then sales tax is paid on delivery charge. This allows the merchant the freedom to say "We don't keep detailed records on individual delivery charges". However, if the merchant is charging the sales tax, they are required to remit whatever they collect to the State of California.
You can view the details and different situations in this brochure, from the California Board of Equalization:
I am not aware that USPS charges sales tax on shipping, as the shipping charge is a postage (similar to buying a stamp, you don't pay sales tax on stamps).
What I meant about paying to CA was that if the shipper is charging sales tax on an order, and not keeping detailed records of separate charges, then they must remit to CA whatever sales tax they collect. They should not be charging customers sales tax on shipping and then pocketing this extra money.
And yes, you are correct, that if the company is charging shipping costs that are more than the actual cost of delivery to the client, the overage is taxable as "handling" charges. A common practice for businesses is to either combine shipping and handling, or say "free shipping" but charge a larger handling fee. It seems as though this merchant is doing something along these lines, and probably considering that lumping your purchases together is handling.
If it makes a large difference, I would ask the company for a refund on the tax on the actual shipping charges, which is what the company paid for deliver fees. You can cite the brochure and the information on shipping charges and "actual cost of delivery not taxable" as state guidelines. If they refuse, you could tactfully tell them that you are going to call the CA board of equalization with this information, just to make sure that their practices are legal.
I wish you the best of luck, and I understand your frustration. It seems as the business owner benefits by keeping "undetailed" records and calling everything handling.
I think that the regulations in the brochure pretty much cover how the merchant can charge sales tax on the shipping without it being illegal. If you have read the regulations and still feel that what the merchant is doing is illegal, I strongly recommend that you call the franchise board.
Usually, for interstate commerce, the merchant does not charge sales tax because the customer is not physically buying the product in the other state, and the customer is responsible for his or her own state's use tax on the imported item. This is just a general situation, as certain states do charge sales tax when shipping to certain other states; I'm sure that you've seen this on websites.
If your question is Does the USPS charge sales tax on its own delivery service, then I am 90% sure that they don't, but if you would like to wait I will call the USPS myself to verify this on Monday.
My understanding of the CA regulations is that if tax is charged on shipping along with the product and the handling (in other words, the whole ball of wax), then the entire amount of sales tax charged is paid to CA. Remember it is state sales tax, not sales tax charged for the United States Post Office.
You may also wish to post any "legal" questions on the legal site of Just Answer. Although laws regarding taxes are generally a tax issue, the legal experts may be able to quote certain statutes or have a different perspective on the matter. I sincerely XXXXX XXXXX I haven't been able to give you the exact answer you need---but I believe that what the merchant is doing is not illegal if he or she is not keeping a detailed record of individual shipping charges. I still recommend that you challenge the merchant with your findings and ask them why you are being charged sales tax on shipping if the shipping is a separately stated charge, and shouldn't you at least be able to get a refund of the tax on the shipping charge for the actual cost of delivery?