Sales and Use Taxes in Idaho

April 13, 2006

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In Idaho a tax is imposed on retail sales to be collected by the retailer from the consumer. A tax is also imposed on the storage, use, or consumption in Idaho of tangible personal property purchased for such purpose. Included in the taxable items are admission charges and the use of an amusement device operated by coin, currency, or token. The sales tax does not apply to sales of services except for the following:

producing property to the special order of the customer
producing property for consumers who furnish the materials used
food, meals, and drinks for a consideration
admission charges and charges to use property or facilities for recreational purposes
providing hotel and trailer court accommodations
leasing or renting tangible personal property
intrastate transportation for hire by air of freight or passengers except as part of a flight by a certified air carrier or an air ambulance service

Sales and use tax rate. Effective October 1, 2006, the Idaho sales and use tax rate is 6 percent (previously 5 percent). In addition, make sure you contact your local governments in Idaho because they are allowed to assess a local sales and use tax.

Tax-exempt items. Idaho has many specific items that are exempt from sales tax — for example, certain prescription medications are exempt from Idaho sales tax. You'll want to check and see if you are exempt from the sales tax.

Responsibility for paying sales tax. In Idaho, the sales tax is imposed on the consumer, although the retailer is responsible for collecting the tax.

Use tax. In Idaho, the use tax is imposed on the privilege of storing, using, or consuming within the state tangible personal property that was acquired for storage, use, or other consumption in the state. Use tax applies when property is purchased outside of Idaho or from a retailer not subject to the Commission's jurisdiction and is used, stored, or consumed in Idaho.

Responsibility for collecting use tax. Persons storing, using, or consuming tangible personal property in Idaho are liable for the use tax, but a retailer engaged in business in Idaho is responsible for collecting the tax from the purchaser.

Obtaining tax permits in Idaho. In Idaho all persons desiring to engage in business in Idaho as sellers must file an application for a seller's permit. There is no seller's permit fee. If you're the owner of an amusement device you can obtain an annual permit fee for $35, instead of paying the sales tax.

Leases. Receipts from the lease or rental of tangible personal property are taxable. Rentals to be applied on a future sale or purchase are taxable. When ownership passes upon termination of the terms of a lease contract with no additional consideration or an amount below fair market value, the transaction is a sale, and tax on the entire sale price must be collected on the date the leased property is delivered.

The following discussions address additional sales and use tax issues that many small business owners face: