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Idaho residents must collect sales tax and forward it, along with a return, to the Tax Commission when selling tangible personal property and providing taxable services. Idaho also charges a use tax if a person uses or stores taxable goods and does not sell them.
Types of taxes
In addition to sales and use tax, Idaho has several additional taxes for various types of goods and services.
Idaho’s sales tax is 6 percent. The use tax rate is the same as the state sales tax rate. Retailers need a seller’s permit to conduct retail sales. A business might also owe use tax if it purchases goods to use in the business, and the seller does not charge Idaho sales tax.
Even if the seller is in another state, it should charge Idaho sales tax to Idaho purchasers. If not, the purchaser is responsible for paying use tax.
Discretionary sales surtax
Some Idaho cities charge a “city tax” or a local sales tax. If the business location is in a city that charges extra tax, contact the city for the tax rate. The local jurisdictions that charge an additional tax include:
- Lava Hot Springs
- Sun Valley
- Swan Valley
Transient rental taxes
All hotels, motels, and other short-term rentals are subject to Idaho sales tax. Additionally, certain jurisdictions might apply two additional taxes:
- Auditorium districts could charge up to 5 percent additional tax.
- Local districts could also charge 2 percent additional tax.
An auditorium district that levies its tax, plus a local district tax, could have up to 7 percent in taxes in addition to the state’s 6 percent, for a total of 13 percent due on the sales and use tax return.
Sales of new mobile homes and new modular buildings are taxable on the first 55 percent of the purchase price. Items used for setting up and transporting the mobile home or modular building are included in the purchase price and are taxable.
Used mobile homes are exempt from Idaho sales tax. Items to repair mobile homes are subject to Idaho’s sales tax.
Outfitters and guides
The services of outfitters and guides for outdoor recreational activities are subject to Idaho’s sales tax. If the outfitter takes a customer to a different state as part of the activity, the outfitter or guide must separate services and fees by state and charge tax only on the activities and sales of goods in Idaho.
If a buyer is out of state, the seller does not charge Idaho sales tax on the items sold. However, a business might need to charge the buyer’s state’s sales tax, though it is not required. If the Idaho seller does not charge the buyer sales tax based on the buyer’s address, the buyer must pay use tax if his state requires it. However, most sellers charge another state’s sales and use taxes as a convenience to the buyer. Some states do not have a sales and use tax.
Registering for Idaho’s taxes
Once you register your business with the Idaho Secretary of State and apply for a federal Employer Identification Number (EIN), you are ready to open a sales tax account. You will need the following tax information to register for an account:
- EIN (if applicable)
- Social Security number
- The mailing and physical addresses of the business
- Date of incorporation and, if different, the date the business began in Idaho
- Employee information, including the number of employees, hire date, and other information.
Visit TAP to complete the registration online. Idaho no longer offers downloadable documents to register by paper filling. A business can request paper forms by contacting the office. The office will forward personalized forms to the business.
Once the business registers for a tax account, it will also receive an exemption certificate. A business must show the exemption certificate in order to purchase goods for resale without paying taxes.
Idaho tax exemptions
Filers in certain industries do not have to pay sales tax on items used in their businesses, even if the business is not a nonprofit business. Several businesses that are exempt are listed below. A new business owner should always check Idaho’s tax laws to determine whether his business is exempt from paying retail sales tax on items used in the business.
Tangible personal property used in the logging industry is exempt from Idaho sales tax. Examples of logging equipment include:
- Chainsaws, chains, bar oil
- Tree harvesters
- Skidding cables
- Log loaders and jammers that are not licensed motor equipment
- Hydraulic oil, parts, and other items required in the logging operation
- Fuel used in the logging operation
- Tools such as saw sharpeners
Sales to Native Americans
Businesses on Native American reservations can sell to Native American residents of the reservation without collecting sales tax. The business must document each tax-free sale. Buyers must show that they are a resident of the reservation.
Sales of tangible personal property sold to farmers for the primary use of farming are tax exempt. The farmer must “directly use” the property for farming purposes. Tax-exempt equipment and supplies include:
- Certain transportation items, such as equipment used to move farm produce, including tractors
- Disinfectants used in the dairy industry
- Plants and seeds
- Safety supplies
- Quality control equipment
The professional fees charged by a veterinarian are not taxable. However, any tangible personal property used in the treatment of an animal is taxable, including drugs. If the veterinarian does not charge for drugs and supplies used while treating an animal, the veterinarian must pay a use tax on the drugs and supplies.
For example, a veterinarian does surgery to repair a broken bone. The veterinarian does not itemize all items used during and after the surgery but charges the customer a flat rate. The veterinarian must list the items used and pay a use tax on the items.
If the veterinarian itemizes the customer’s bill, including all items used during surgery, the veterinarian charges Idaho sales tax on the tangible personal property used during the surgery.
Calculating Idaho’s sales and use tax rates
To calculate sales or use tax on goods sold, multiply 0.06 by the price of the taxable item and add it to the purchase price. For example, an item that costs $10 would have a tax of $0.60 (10 times .06 equals 60 cents). The total sale would be $10.60.
Filing and paying Idaho’s sales and use taxes
A business can file sales tax returns and remit the tax due online or via mail.
To file online, create a Taxpayer Access Point (TAP) account. You will need your Social Security Number and ITIN. When a business uses a Taxpayer Access Point account, it can pay taxes and file reports 24 hours per day, seven days per week. Additionally, the TAP account allows you to check your payment history.
You can also choose to file the business’s reports and pay the tax obligation via mail. Once you register with the Idaho State Tax Commission, the Commission will forward personalized tax forms to you. If you file electronically, do not forward paper forms to the Commission.
If you lose a form, you must contact the Commission, and it will mail you another form. Always use a form that is preprinted with the employer’s name and account number. The form should also have the correct period preprinted on it.
Sales and use tax due dates
In most cases, sales tax is due on a monthly basis. The due date is on or before the 20th of the next month. For example, the sales tax you collect in January is due on or before February 20.
If the tax is due quarterly, the sales tax you collect each quarter is due on the 20th day of the month after the quarter ends. For example, the first quarter runs from January through March. The tax is due on or before April 20.
Idaho’s sales tax is 6 percent.
Tangible personal property is anything you can touch, feel, see, measure or weigh. All tangible personal property and many services are subject to Idaho’s 6-percent sales tax rate.
Request a clearance letter from the Idaho State Tax Commission. Remit a statement stating you are buying the business and the name, location and seller’s permit number. Also, remit a signed statement from the seller authorizing the request or a copy of the signed purchase agreement. Mail the information to the Idaho State Tax Commission, PO Box 36, Boise ID 83722-0410.
Deduct the amount of the sales tax obligation from the sales price of the business. Pay the sales tax obligation at the closing. For example, if a business is $500,000 and the seller owes $100,000, the seller gets $400,000, and the Idaho State Tax Commission gets $100,000. You are still paying the same $500,000 for the business.
Visit the Idaho State Tax Commission and tick the box for the change you need to make. Fill out the online form and click “Submit.”
Idaho does not have a sales tax holiday.
A business must pay sales tax revenue when it is due. Idaho uses the accrual method of accounting, which means that the tax is due for the month you made the sale. For example, a customer has a 60-day accounts payable account. The customer purchases goods on January 30 but does not pay for those goods until March 2.
If the business pays sales tax on a monthly basis, it must include the customer’s January purchase in the February tax report and payment on or before February 20.